The German government has earmarked an additional €1.6bn for an equity fund for technologies of the future (Zukunftsfonds or Future Fund) and €150m for the European Recovery Programme (ERP) fund, to finance young companies, looking at impact investments, according to a joint statement by the Ministry of Economy and Climate Action and the Ministry of Finance.
The move comes after the final closing of the Growth Fund (Wachtumsfonds) for venture capital investments, a central pillar of the Zukunftsfonds, that raised €1bn from Allianz, BlackRock, Generali Deutschland and pension schemes for professionals (Versorgungswerke), among others.
In total over 20 institutional investors allocated capital to the fund, with the government and KfW Capital, the subsidiary of state-owned investment and development bank KfW, acting as anchor investors.
The cabinet intends now to further facilitate equity capital for young and innovative companies operating in the technology sector, the ministries added in the statement.
“In addition to the €1.75bn in public funds that we invest, there is at least the same amount coming from private funds. We are therefore talking about a total volume of public and private funding of at least €3.5bn available for investments in the German venture capital market,” said Robert Habeck, minister for economic affairs and climate action.
The capital is intended to support German and European start-ups investing in artificial intelligence, climate, quantum or biotechnology, in the growth phase and looking at exit opportunities, the ministries added.
KfW Capital will partner with private venture capital funds to deploy €850m, out of the €1.75bn, for direct investments in start-ups working with innovative technology during a capital-intensive growth phase.
Up to €500m are planned as a contribution from the German government to strengthen exit financing of European tech champions.
“We plan to set up a European exit initiative together with our partners. This is intended to lay the foundation for successful German and European start-ups that won’t have to move to non-European markets for exits,” the ministries added.
KfW Capital, which will manage €200m to continue supporting the Growth Fund, and to mobilise further capital from institutional investors.
The ministries said that the €200m are earmarked by KfW Capital for investments in so-called impact venture capital funds, which, in addition to financial returns, aim to have a measurable positive, social or ecological impact, supporting the new impact investing market.
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