VC business climate back in the green zone

The venture capital business climate improved significantly at the end of 2020. The coronavirus-related drop in sentiment has thus been recovered.

The business climate indicator for venture capital rose by 26.7 points to 17.0 balance points at the end of 2020, while the assessment of the current business climate (+28.3 points to 16.1) and business expectations (+25.2 points to 17.8) recorded similarly high gains. This is according to the latest investor barometer published by the German Private Equity and Venture Capital Association (BVK) and the promotional bank KfW.

The rising values also show that the renewed lockdown has not unsettled the industry. Overall, the anti-corona measures appear to have had less of an impact on the start-up scene than initially feared.

"The venture capital year has come to a conciliatory end. The progress made with future funds and the Fund Location Act were two important mood boosters in the final quarter and, unimpressed by the new lockdown, provide a good basis for the start of the year," says Dr. Fritzi Köhler-Geib, Chief Economist at KfW Group.

The industry association BVK is optimistic about the future in view of the figures. "VCs and their start-ups have learned to deal with the situation and assert themselves in a challenging environment. The rapid recovery in sentiment speaks for the increased robustness and maturity of the market and makes us optimistic for 2021," says Ulrike Hinrichs, Managing Director of BVK.