Foerdert Times Internet startups and companies

Venture capital and business start-ups

Young, innovative companies are of central importance for the competitiveness of our economy and for the future prosperity of our society. This is particularly true with regard to digitization and the resulting economic opportunities. Good, promising ideas are the basis for this. However, sufficient private funding is not always available to implement these ideas. A look at other successful start-up locations shows that access to venture capital is a key success factor.

Berlin in particular has recently received a lot of attention as an investment destination. Nevertheless, what is symptomatic of all of Germany also applies to Berlin: The promising start-ups are small and grow relatively slowly. If we want to catch up with the most successful markets, we need a stronger German venture capital market - especially for particularly capital-intensive financing in the growth phase.

The federal government has set up a number of funding instruments (PDF, 354 KB) that provide equity capital or grants for innovative start-up projects. This is intended to mobilize company founders and improve the start-up climate at universities and research institutions: for more dynamism in technology-oriented and knowledge-based company start-ups and sustainable growth for these companies.

About the programs and funding instruments in detail:

INVEST - venture capital grant

With the "INVEST - grant for venture capital", the Federal Ministry for Economic Affairs and Energy (BMWi) supports the participation of private investors - especially business angels - in young, innovative companies with an acquisition grant amounting to 20 percent of the investment amount. In addition, in the case of natural persons, capital gains are subsidized with a flat-rate exit grant of 25 percent to offset the taxes due on capital gains. These two grants are intended to improve the financing conditions of start-ups.

Further information on "INVEST - Grant for Venture Capital" can be found here.

EXIST business start-ups from science

With the "EXIST" program, the Federal Government is promoting, on the one hand, specific high-tech start-up projects (funding lines EXIST start-up grant and research transfer) and, through the funding line EXIST start-up culture "EXIST Potentials", measures to anchor a culture of entrepreneurial independence and to strengthen the entrepreneurial spirit at universities and non-university research institutions. In the 2019 budget year, the BMWi more than doubled the funds for the EXIST funding program, so that more start-up projects can be funded.

The "EXIST start-up grant" from the BMWi supports students and graduates in preparing innovative start-ups and in drawing up a business plan. "EXIST research transfer" supports technically particularly demanding start-up projects from universities and non-university research institutions that have relatively long development times. Thanks to the additional budget funds, the new competitive funding line "EXIST-Potentiale" could be equipped with three focal points (professionalization / regionalization / internationalization) and will start at the beginning of 2019.

Further information on the various program pillars of EXIST can be found here.

German Accelerator (GA)

The German Accelerator supports German start-ups in introducing their business models abroad and in using the growth opportunities of foreign start-up hubs. In 2018, in addition to the existing locations in the USA (Silicon Valley, New York City and Boston / Cambridge for Life Sciences), a new German Accelerator location was set up in Singapore for the South-East Asia area.

High-tech start-up fund

The High-Tech Gründerfonds invests venture capital in young technology companies and provides the necessary supervision and support for the management of young start-ups. The prerequisites for financing are promising research results, an innovative technological basis and a promising market situation.

You can find more information about the High-Tech Start-up Fund here.

coparion

The venture capital fund coparion invests venture capital in innovative technology companies in the start-up and early growth phase. Small, innovative technology companies in the commercial sector based in Germany are eligible to apply. Coparion is financed by the ERP special fund, KfW Capital and the European Investment Bank (EIB).

You can find more information about coparion here.

ERP / EIF fund of funds, European Angels Fund

The fund of funds, which is financed jointly by the European Investment Fund (EIF) and the ERP Special Fund as part of the ERP funding programs, participates in venture capital funds that invest in technology companies in their early development phase or provide follow-up financing for technology companies in the early or growth phase. Part of the funds will be used for the European Angels Fund (EAF). This co-finances the investments of selected and experienced business angels as well as other non-institutional investors who participate in innovative companies. With the co-financing provided, the fund increases the financial power of investors and thus supports the financing of innovative companies in their start-up, early and growth phases.

Further information on the ERP / EIF fund of funds and the European Angels Fund can be found here.

Contact:
European Investment Fund
96 Blvd Konrad Adenauer
L-2968 Luxembourg
Email: [email protected]
www.eif.org/what_we_do/equity/eaf/index.htm

ERP / EIF growth facility

The growth facility with a volume of 500 million euros, also jointly set up by the ERP special fund and the European Investment Fund, aims to finance companies in the growth phase. As a co-investment fund, it invests in innovative German growth companies together with successful venture capital funds.

More information on the ERP / EIF Growth Facility can be found here.

ERP VC fund investments

KfW-Beteiligungsgesellschaft KfW Capital, founded in 2018, participates in venture capital funds in Germany and Europe on behalf of and at the risk of the ERP special fund. The aim is to improve the venture capital supply for technology-oriented start-ups and young companies in the growth phase in Germany and to help close the capital supply gap in the start-up and growth phase. An investment volume totaling 180 million euros per year is targeted from 2020.

The individual investments should have a volume of a maximum of 25 million euros and are made in selected venture capital funds based in Germany or Europe, which can cover both the start-up and the growth phase of young companies and which invest significantly in Germany. In principle, investments in venture capital funds with a team with industry experience are planned. In addition, however, investments in newly founded fund companies ("first time" funds) are also possible. The focus of the investments should be on funds for start-ups from technology-oriented sectors (IT and e-commerce, biotech, life science, medtech, cleantech). Participation in "social venture" funds that invest in commercially active social enterprises can also be considered. Participations in so-called “venture debt” funds are also possible (also known as “venture loan funds” or “growth debt funds”), for which the same principles and conditions apply as for venture capital funds.

Applicants / managers of VC funds can contact KfW to contact them.

Contact:
KfW Capital
Bockenheimer Landstrasse 98
60323 Frankfurt am Main
Tel .: +49 69 7431 8880
Email: [email protected]
kfw-capital.de

Companies seeking capital can take advantage of the financing option indirectly. You can find initial information here.