Status: 03/06/2022 14:04
Economists have long been calling for greater risk-taking and innovation in the German economy. The new start-up strategy of Minister of Economy Habeck should help.
German start-ups should have easier access to venture capital to be able to accelerate economic development. This is what the draft of the new start-up strategy of the Minister of Economy, Robert Habeck (Zieloni), provides for. The aim is to further strengthen the German venture capital market and create additional financing opportunities for large volumes by domestic investors.
To this end, a future EUR 10 billion fund was created last year, which also separately supports high-tech and climate start-ups. At the European level, the creation of megafunds is currently being considered, and a program of promotion of the so-called business angels. The federal government also wants to change something about IPOs that are so important to investors and companies, and modernize the rules for admission.
“We want to cover a wide range of topics and quickly come to a final strategy so that individual points become a reality. We want to achieve it in this election period, “said the representative of the federal government start-ups, Anna Christmann from Vegetable.
Planned tax exemption
The industry has long complained that after initial successful early-stage funding, start-ups are often denied access to large-scale financial injection as they continue to thrive. Currently in Germany it is difficult for rapidly growing young companies with high capital requirements to get enough money. Bank loans are not an option due to the risk to banks and their capital rules.
Therefore, funding is provided by state subsidy programs and specialized public and private investors. The traffic light coalition now wants to introduce a VAT exemption for venture capital funds and is seeking to establish a minimum amount of investment in these funds.
Regulation prevents cash flow
In the future, insurance companies and pension funds will also be able to invest their money as venture capital. “The federal government is seeking to raise capital for statutory and private retirement plans and will provide them with a minimum amount of investment in VC funds to strengthen the availability of venture capital structurally and sustainably,” the newspaper reads. The abbreviation VC stands for venture capital.
In the USA, the Gulf countries, Scandinavia, Great Britain and other countries, for years, pension funds have been flowing through the venture capital pool to finance young companies. On the other hand, in Germany, regulatory requirements largely prevent this cash flow.
Set the right priorities
However, during the corona crisis, funding amounts increased significantly due to low interest rates and increasing digitization. According to a study by the consulting company EY, German start-ups received more venture capital in 2021 than ever before. The total value has more than tripled to almost EUR 17.3 billion. Meanwhile, things reversed again amid falling tech stocks, rising interest rates, inflation and a global economic slowdown.
The start-up association welcomed the plan of the Ministry of Economy. The current project sets the right priorities to improve the conditions for start-ups in Germany, explained Christian Miele, president of the association’s board. “If the start-up strategy is consistently implemented, start-ups will in the future contribute even more to the economic, ecological and social transformation of our country.”
Bosch as a venture capitalist
Meanwhile, the Bosch tech group is once again engaged as a venture capital investor for start-ups. Bosch launches a € 250 million fund through its subsidiary Robert Bosch Venture Capital (RBVC). This is the company’s fifth fund, the company said.
RBVC specializes in innovative technology startups, the statement said. The portfolio includes over 50 companies. You invest up to EUR 25 million in start-ups and support them with knowledge and the company’s network. Bosch, on the other hand, gains early access to new technologies and can incorporate them into its own innovations. RBVC invests in six to ten start-ups every year.