The right dare has to be learned

Before the federal elections, most of the major parties promised to combat the lack of venture capital in Germany. That sounds welcome at first. But whether the situation for start-ups will actually improve in the next legislative period depends on the practical implementation.

The management consultancy PwC had already noted it at the end of last year: As soon as it comes to large financing rounds, there is a lack of venture capital in Germany. The fact that more start-ups in Germany achieved unicorn status in 2021 than ever before was only possible because a lot of money flowed in from abroad, for example from the United States. For the startup ecosystem here, that's a problem. When founders and investors dare to exit, whether via the stock exchange or a sale, the money no longer ends up in the German cycle, but moves overseas.

It is therefore encouraging that at least the CDU/CSU, SPD, Greens and FDP are addressing the problem in their programmes in view of the federal elections. The four parties want to make more venture capital available to founders. The models presented include an expansion of the already existing "Future Fund", more competencies for the development bank KfW and the creation of a secondary market for start-up investments. Depending on party preference, start-ups in future industries such as AI and quantum technology or in the sustainability sector are also to be promoted.

All of these solutions - if implemented correctly - can at least close the funding gap to some extent. But when it comes to distributing money, the state has not been very efficient in recent months. One need only recall the disaster surrounding the so-called "November aid", which many an entrepreneur had not even received by February. A certain scepticism about government VC injections is therefore appropriate.

Much more promising is the idea of using government incentives and adjusted regulations to activate institutional financiers and other private investors as venture capitalists. Insurance companies and pension funds, for example, have vast sums of assets that could help to raise large financing rounds in Germany. If this stone could be set in motion with the help of governmental initialization, German founders would already be helped a lot. It is to be hoped that the future coalition parties will recognise the advantages of this solution and not succumb to the illusion, like so many of their predecessors, that the state is the better entrepreneur.