The German government is in the process of starting to fundraise for a fund of funds (FoF) to mobilise capital from institutional investors to invest in start-ups.
The FoF should start the fundraising phase in the next months, according to a statement by the ministry for economic affairs. It is being launched with the support of KfW Capital, the venture capital arm of the state-owned Investment bank KfW.
The FoF is a further component of an equity fund, called Future Fund, with €10bn in capital to invest in start-ups developing future technologies.
A spokesperson for the ministry of economic affairs told IPE that the preparatory work for the vehicle is currently underway and the details on the amount and a precise timeframe for the fundraising could not be disclosed.
The government also plans to increase the amount of capital in Coparion, a fund financed through the ERP Special Fund, which is in turn supported by KfW Capital and the European Investment Bank (EIB). Coparion has assets under management worth €275m.
The federal minister of finance, Olaf Scholz, said yesterday at the event ‘Future Fund – Thinking Innovations Ahead’ that “with the start of the Future Fund the start-up ecosystem in Germany will receive an impulse,” adding that the fund is the “kick-off for more investments in the future.”
He said: “Start-ups ensure investments and many new jobs [..] we want and must use the potential [of start-ups] – better conditions for start-ups bring dynamic for the whole economy.”
The minister for economic affairs, Peter Altmaier, said start-ups are the “engine of structural change,” but there is a lack of sufficient access to venture capital, especially in the growth phase of a business.
Therefore the government is adding €10bn to its existing programmes through the Future Fund to mobilise over €50bn from private and public partners for start-ups over the next few years, Altmaier added.
“Start-ups are no longer forced to migrate abroad, they can grow up here [in Germany],” he added.
Scholtz described the Future Fund as building blocks with “different offerings” for venture capital investments that “the KfW will build and manage with [its] broad expertise.”
One of the building blocks is to reinforce the role of KWf Capital to participate with “bigger tickets” in funds, for venture capital, venture debt and growth, the finance minister added. KfW Capital will in future invest up to €50m per fund.
The other two building blocks are a further €3.5bn to be added to the existing ERP-EIF Growth Facility, a fund managed by the European Investment Fund (EIF) on behalf of the Ministry of Economic Affairs (BMWi) and the European Recovery Programme (ERP), and a Deep Tech Future Fund, with a volume of up to €1bn.