VC market starts the new year strongly

The business climate indicator of KfW and BVK is approaching its best values again. One reason for this is probably the controversial shell companies.

The venture capital market seems to have finally recovered from last year's Corona shock. The business climate in the segment approached its best values again in the first quarter of 2021, as the development bank KfW announced.

The business climate indicator of the early-stage segment rose to 27.8 balance points, an increase of 11.5. Overall, market participants also assess the current business situation very positively, the corresponding indicator rose to 31.9 balance points, an increase of 16.4. It thus scrapes back to its best value from 2018, when the indicator was 34.5 points. KfW sees the reasons for the improved scores partly in the implementation of the German government's Future Fund, and partly in the increasing number of IPOs, so-called Spacs, which provide start-ups with an alternative to traditional IPOs.

"The upswing in sentiment in the VC market that we observed at the end of 2020 has continued in the first quarter of 2021," said Dr. Fritzi Köhler-Geib, chief economist at KfW. "The very good assessment of the deal flow by VC investors is particularly pleasing in this context. After all, a promising deal flow lays the foundation for promising VC investments. The indicators for quality and quantity of deal flow are only slightly below their best values."

The German Venture Capital Barometer is calculated regularly by KfW together with the Federal Association of German Corporations and the Handelsblatt.