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Germany Launches €1 Billion Fund to Boost Venture Capital Investment

Map of Germany with euro symbols and upward arrows, symbolizing the €1 billion venture capital investment fund.

Germany has announced the closing of a €1 billion fund of funds, named ‘Growth Fund Germany’, aimed at investing in German and European venture capital (VC) funds. This initiative is part of the federal government’s Future Fund, established in 2021 to strengthen the VC industry in Germany.

Key Takeaways

Mobilising Private Capital

The new growth fund is notable for being primarily funded by private investors, a departure from the norm in Germany. Traditionally, German insurance companies and pension funds have invested in bonds rather than venture capital, limiting the capital available to startups, especially in later stages.

According to a 2023 analysis by the VC firm Redstone, US pension funds own 10% of Germany’s tech unicorns, compared to just 0.2% held by German pension funds. Christoph J. Stresing, managing director of the German Startups Association, highlighted the importance of this new approach in mobilising fresh capital for venture capital and startup financing.

Investment Criteria

The majority of the new €1 billion fund is expected to be invested in later-stage VCs that write larger cheques. Key expectations of the fund include:

Current Investments

Out of the 16 funds the €1 billion growth fund has already invested in:

This initiative aligns with broader European efforts to encourage private institutional investors to back fast-growing, innovative companies. Earlier this year, the UK government announced an agreement to get pensions to invest as much as £75 billion into British startups and VC firms.