Support for start-ups will be further strengthened as part of government measures to combat the coronavirus pandemic.
commented: “We are creating a €2 billion start-up booster to support start-ups, new technology companies and small businesses during the coronavirus crisis. Traditional credit instruments often don’t fit the needs of these new, innovative companies. We are therefore offering a customised support package for this group. We are using €2 billion to expand venture capital financing, so that funding rounds for promising, innovative start-ups in Germany can continue to take place. In this way, we are safeguarding innovation and jobs in Germany.”
Finance Minister Olaf Scholz commented: “Start-ups should be able to continue to successfully develop their ideas despite the current crisis. For this reason, we will provide rapid assistance for new businesses. We are launching a €2 billion assistance package that will ensure this innovative sector, with its thousands of employees, makes it through the crisis in good shape. This assistance will enable funding rounds to continue. This is crucial because Germany needs innovative thinkers to ensure a bright future.”
The German government is building on the existing assistance programmes by adding a package of measures that is tailor-made to the needs of start-ups. While start-ups will generally have access to all of the support measures contained in the coronavirus assistance package, traditional credit instruments often do not fit the needs of start-ups.
The new package of measures includes the following elements, which will be implemented step by step:
- Additional public funding will quickly be made available to public venture capital investors (both individual funds as well as funds of funds, e.g. KfW Capital, the European Investment Fund (EIF), the High-Tech Gründerfonds, Coparion). This money will be used for funding rounds for start-ups as part of co-investments made jointly with private investors.
- The plan is to provide the funds of funds KfW Capital and the EIF with additional public funding so that they are able to take over the stakes of funds that pull out.
- Venture capital financing and equity replacement financing will be facilitated for small businesses and new start-ups that do not have venture capitalists as shareholders.
In parallel to the implementation of the new package of measures, the German government is also continuing to work on the design of its “future fund” for start-ups, which in the medium term will help businesses to emerge successfully from the crisis.