Germany plans to set up a second Growth Fund – Wachstumsfonds II – by 2026, to open another vehicle for Pensionsfonds and Pensionskassen that want to invest in start-ups, a spokesperson for the Federal Ministry of Economic Affairs and Climate Action (BMWK) told IPE.
The first Growth Fund was launched in 2023 as a further pillar of the Future Fund (Zukunftsfonds) with a volume of €1bn, to encourage investments from pension funds not yet invested in funds established by public-private partnerships for seed investments in venture capital (High-Tech Gründerfonds, HTGF).
The spokesperson said that institutional investors invested around two thirds of the capital volume in the Wachstumsfonds I, which was developed specifically for institutional investors.
The German government considers the amount of capital raised for the first Growth Fund a success, therefore it is planning a second vehicle for venture capital allocations of institutional investors, the spokesperson added.
The first fund raised €1bn in its final closing from Allianz, BlackRock, Generali Deutschland, Debeka, Stuttgarter Lebensversicherung, and pension schemes for professionals (Versorgungswerke), among others.
Last week, the German government provided €660m to the HTGF to finance start-ups in the growth phase and later-stage funding rounds, making another step on the path to fully implementing the strategy to support young companies.
The government has channelled €500m from the Future Fund, and €160m from the special fund of the European Recovery Programme (ERP) to start the HTGF.
Especially when it comes to growth financing, Germany is significantly behind other nations such as the US, the BMWK said, explaining why it started the growth fund.
HTGF can invest up to €30m, and in exceptional cases up to €50m, in selected portfolio companies, it said, adding that 45 investors in the early-stage funds can also participate in a separate side fund (HTGF Opportunity Private), with a double-digit million sum expected to be allocated, the spokesperson added
This means that over €1bn could be available for funding portfolio companies of the HTGF seed funds, as the HTGF Opportunity still has to mobilise at least 30% of private capital, the spokesperson added.
Since its inception in 2005, HTGF has launched four funds and has around €1.4bn in assets under management, financing more than 750 high-tech start-ups.
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