Prevent emigration in the USA: EU countries want to invest almost four billion in start-ups

Start-ups are now a key driver of innovation. In order not to lose the ideas and the companies to other countries, Germany and four other EU countries forge an alliance. A fund with 3.75 billion euros is to promote young companies – and keep them in Europe.

Together with four other EU countries, Germany is launching a new fund for promising European start-ups. The federal government wants to support “young, innovative high-tech companies in Europe in the late growth phase,” said the federal finance and economics ministries. In the long term, this will serve to strengthen “Europe’s technological sovereignty”. The initiative is specifically intended to prevent companies from migrating to the USA, for example.

According to the ministries in Brussels, Federal Minister of Finance Christian Lindner and the start-up representative in the Federal Ministry of Economics, Anna Christmann, signed the mandate agreement for the so-called European Tech Champions Initiative (ETCI). Also involved are France, Spain, Italy and Belgium, as well as the European Investment Bank (EIB). They are initially making 3.75 billion euros available, one billion of which comes from Germany.

According to the Federal Ministry of Finance, the initiative specifically aims to keep successful companies in Europe. “So far, the largest and most promising European growth companies have mostly only had foreign capital for very late rounds of financing,” said ministry officials. This often leads to companies being listed on foreign stock exchanges or relocating their headquarters straight away.

According to the federal government, the ETCI goes back to a Franco-German agreement. The idea is therefore to pool public funds from participating EU countries and the EIB and to invest in large venture capital funds, which in turn provide growth capital to European technology companies. “Only together can we make Europe a strong and competitive start-up location,” said Federal Minister of Economics Robert Habeck. Other EU countries can still join in the next 18 months.

“In the future, young companies will have better access to capital in a crucial phase of growth,” said Stefan Wintels, CEO of the KfW development bank. “With this step, we are strengthening Germany and Europe as a technology location.” The German funds for the ETCI come from pots administered by the KfW development bank.