Venture Capital Funds in Germany — The Status Quo, Three Questions and a (Hopefully Not Final) Answer

There are also a sufficient number of young technology companies in Germany. But not all of them find an investor. Here, the verbal club of market failure is often quickly wielded and it is forgotten that German SMEs with their hidden champions stand for a high level of marketable innovations and also successfully bind the successor generation to the company. But this rarely affects disruptive technologies in just emerging industries, and so business angels and venture capital funds are also in demand in Germany to fill this gap.

After an initial jump starting in 1997, fundraising by German private equity companies peaked in 2007 and has since fluctuated around an average of approximately EUR 1.5 billion p.a. In the past 10 years, according to the observation of remaining market participants, approximately 80 percent of German venture capital companies have disappeared from the market. Fundraising is also a Sisyphean task for the venture funders that still exist; a lot of creativity and looking far beyond one's own national borders are required. Thus, it is questionable who will satisfy the capital needs of young technology companies in the future.

State Cornerstone Investors

High-Tech Gründerfonds plays a key role in the area of direct investment. After all, SAP, a globally successful software group, recently joined the 13 strategic investors of High-Tech Gründerfonds II alone. However, High-Tech Gründerfonds does not make any fund investments. The Kreditanstalt für Wiederaufbau ("KfW") is no longer active in the field of fund investments, apart from its investor status in the High-Tech Gründerfonds. Originally, two limited partner strands converged at KfW: In the 1990s, tbg was still supporting 40-50 venture capital funds with around 400 million euros of state capital. KfW itself has often supported initiators such as Earlybird, eCapital entrepreneurial Partners and Neuhaus Partners as an investor over several fund generations. Now the focus is limited to direct investments and the supposedly more lucrative focus on medium-sized companies.

This gap is only partially filled by the European Investment Fund. In Germany, target funds include Earlybird IV, EMBL Technology Fund II and Wellington Partners Life Sciences IV.