The German start-up scene has been complaining for a long time that after initial successful financing, start-ups are often denied large injections of money during further growth. Federal Minister of Economics Habeck wants to change that.
In the future, start-up companies in Germany should be able to obtain venture capital more easily in order to be able to advance their economic development. This is what the draft for a new start-up strategy by Economics Minister Robert Habeck, which has become known, provides for. “The federal government will continue to strengthen the German venture capital market and create additional opportunities for large-volume financing by domestic investors,” the paper says.
The industry has complained for a long time that, after initial successful financing in the early phase, start-ups are often denied access to large-scale financial injections as they continue to grow. In the future, insurance companies and pension funds will also be allowed to invest their money as venture capital. “The federal government is striving to build up a capital stock for statutory and private pension schemes and will provide this with a minimum investment quota in VC funds in order to structurally and permanently strengthen the availability of risk capital,” the paper says. The abbreviation VC stands for venture capital. In the USA, the Gulf States, Scandinavia, Great Britain and other countries, large sums of money have been flowing from the pension funds via venture capital pots into the financing of young companies for years. In Germany, on the other hand, regulatory requirements largely prevent this cash flow.
The start-up association welcomed the plan from the Ministry of Economic Affairs. The present draft sets the right priorities to improve the conditions for start-ups in Germany, explained Christian Miele, CEO of the start-up association. “If the startup strategy is consistently implemented, startups will make an even greater contribution to the economic, ecological and social transformation of our country in the future.”
The chairman of the Federal Government’s Commission of Experts for Research and Innovation (EFI), Uwe Cantner, also welcomed the Minister for Economic Affairs’ step. It is extremely important to further improve the financing conditions for start-ups, especially for the growth phase, in order to remove hurdles in recruiting skilled workers and to promote start-ups from science. However, he still sees room for improvement, Cantner told the “Handelsblatt”.
