More venture capital for German and European founders: The European Venture capital instruments ERP/EIF fund of funds and the European Angels Fund are in high demand and have been increased by one billion euros to 2.7 billion euros, according to the Federal Ministry of Economics.
According to a recent report in the daily newspaper “Die World" now also after: Together with KfW Bank, a new start-up fund called “Tech Growth Fund” with a volume of ten billion euros is to be created. A total of 20 billion euros in capital is expected to be available. This means that for every euro of venture capital, founders could receive a one-euro loan at preferential rates through the state-owned development bank KfW.
Access to venture capital is crucial
Federal Minister for Economic Affairs Sigmar Gabriel explains:
"A crucial success factor for a dynamic startup scene is good access to venture capital. We need to become even more attractive in this area in Germany.
By increasing our proven financing offerings by one billion euros, we have come one step closer to our goal of initiating a new era of entrepreneurship in Germany."
Since its launch in 2004, the ERP/EIF fund of funds has taken on an important role in startup financing by participating in venture capital funds that invest in early- and growth-stage technology companies.
Co-financing and follow-up financing
The project, which is also financed by EU funds, European Angels Fund offers co-financing for Investments of experienced Business Angels. The above-mentioned funding offer is supplemented since spring 2016 through the program ERP/EIF Growth Facility, the Follow-up financing should support.
The total volume of these three venture capital instruments—the ERP/EIF Fund of Funds, the ERP/EIF Growth Facility, and the European Angels Fund—will amount to €3.2 billion in the future and is intended to support the financing of startups, high-tech companies, and companies with high growth potential. Since the investments are always made together with other private investors, this commitment provides a strong leverage effect.
Balance sheet for “INVEST – Grant for Venture Capital”
The aim is also to leverage more private venture capital in Germany. German funding program “INVEST – Grant for Venture Capital” serve. The Balance sheet This funding program, which has been in existence for three years, is being controversially discussed. Since May 2013, only about 23.6 million euros of the allocated 150 million euros have been drawn down. One problem appears to be the low awareness of the program.
Hopefully, this will change: A whopping 97% of the surveyed supported investors and at least 64% of the supported startups would consider reapplying.
Another positive aspect is that, for every euro of grant money, an average of €1.50 is invested additionally in a company by the investor. Furthermore, some Virgin Angels are actually venturing into the stock market:
"One-fifth of the investors who benefit from INVEST are investing in a company for the first time. These investors often provide additional support beyond purely financial support, for example, by acting as advisors."
said Parliamentary State Secretary Brigitte Zypries. The stake in Virgin Angels is to be increased even further.
The plan for the "Invest" program, starting in autumn 2016, is to double the eligible investment amount to €500,000 and introduce a tax-offset for capital gains. This could attract more "newbie investors." Anyone interested in applying can find here further information.
Overall, it remains to be seen how widely the various government incentives will be used. What experiences have you had with the various funding funds? We look forward to your feedback. redaktion@munich-startup.de.
