The German government has quick started an equity fund with €10bn to invest in start-ups working with future technologies.
The Future Fund, as it is called, will support young companies to scale-up their business especially during capital-intensive phases of growth.
KfW, the state-owned development bank, will be responsible for the administration of the equity fund.
“We are committing over €2bn of our own funds, and our investment subsidiary KfW Capital will coordinate the individual product building blocks for the federal government,” KfW’s chief executive officer Günther Bräunig said.
The Future Fund is sliced up in different lines of financing and sub-funds that will start to operate in mid-April.
KfW Capital, a subsidiary of the KfW Group investing in German and European venture capital and venture debt funds, will launch funds to finance growth for start-ups by €2.5bn over the next 10 years, with the support from the ERP Special Fund and the Future Fund.
The government has added €3.5bn 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).
A Deep Tech Future Fund, with a volume of up to €1bn, will invest directly in tech companies developing “innovative scientific breakthroughs with significant macroeconomic impact potential,” it said.
The deep tech future fund has the goal to accompany the process of developing technology to reach market maturity.
The government plans to collect €30bn in venture capital with 10 private and public partners to invest in start-ups in Germany, it said.
“Combined with our existing financial instruments, we will be able to provide over €50bn in venture capital for start-ups in the next few years together with private investors,” minister for economic affairs Peter Altmaier said.
Finance minister Olaf Scholz added: “It is critical for us to provide powerful assistance to start-ups from the founding phase through to their transition to a viable business model.”
Parliament gave the green light to start the Future Fund with the adoption of the federal budget for 2021 in December.