This is what the draft German start-up strategy says

In its coalition agreement, the coalition government announced that it would provide greater support for start-ups. The draft now presented by the Ministry of Economics contains a whole series of proposals for improvement.

It was a small Whitsun gift that the Federal Ministry of Economics and Technology (BMWK) presented to the German start-up landscape on Friday: Germany is getting a start-up strategy. Minister Robert Habeck's (Green Party) first draft is 28 pages thick. It contains many warm words. "The federal government is convinced that Germany needs people who courageously break new ground and take risks to do so," it says. To this end, it wants to "create the best possible framework conditions - and also break new ground itself". Germany and Europe should become a strong start-up location.

Representatives of the German startup scene were enthusiastic in part. "We expressly welcome the fact that the German government has already started work on a comprehensive Start.up strategy in its first 100 days in office," said Christian Miele, CEO of the German Start-up Association. The draft now on the table sets the right priorities for improving conditions for startups in Germany, he added.

Achim Berg, president of the digital association Bitkom, also praised the Ministry of Economics' draft. "The federal government has recognized: Only with young, innovative and, above all, bold tech startups will Germany master the transition to a digital and data-driven economy," he said. "The startup strategy addresses this in a variety of ways to put Germany on an international level as a startup location."

Although the draft strategy still has to undergo departmental coordination with other ministries, such as the Ministry of Finance or the Ministry of Labor, before it can be finalized, it is already clear from the first version which points the German government is likely to address. The three most important proposals at a glance.

Financing start-ups

According to the BMWK's idea, the federal government should promote the financing of start-ups. Because there is still a gap in this, all the more so when it comes to the big financing rounds shortly before an IPO. "Especially in the late-stage segment and thus in larger financing rounds, foreign investors - especially from the U.S. and Asia - set the tone. For example, 63 percent of the 20 largest European scale-ups are financed by U.S. investors," the draft also states.

The German government will therefore significantly expand the financing instruments for start-ups, it says, and more private and public capital is to be mobilized. Specifically, the BMWK points to the Future Fund, through which up to 30 billion euros are to flow into startups with the support of the federal government.

In many places, however, the draft is still quite vague. "The federal government is also examining a new module to provide financing to young innovative companies that previously had no access to venture capital fund financing," it says. It also says the federal government will review the requirements for IPOs, that the aim is to bring legal regulations in line with international standards and to modernize listing regulations. "The announced further development of public financing instruments will make it easier for startups to access capital in the scaling phase," says Miele of the startup association.

If the BMWK has its way, startups should also receive venture capital from pension insurance companies and pension funds. So far, this has hardly ever happened in Germany. The prospect of greater capital market orientation of statutory and private pensions plays a "decisive role in securing and increasing prosperity in our country," comments Miele.

Employee participation

According to the proposal, the German government should also facilitate employee participation. Although it is already possible for founders to give their employees a stake in their own company, this is often unattractive to them. The previous federal government of the CDU/CSU and SPD already addressed the issue in its Fund Location Act . As a result, the tax allowance rose from 360 euros to 1,440 euros. Employees also do not have to pay tax on their investment until after twelve years or if they change their employer. This was not enough for start-up representatives. The start-up association, among others, spoke of a "pipe burst".

If the BMWK's draft goes through as it stands, the situation for German startups should improve significantly. The twelve-year period is to be extended. The federal government also wants to examine whether a change of employer always has to lead to taxation. The tax allowance would increase again. In addition, it is a question of a practical "solution". It would make it much easier for startups to attract urgently needed talent, says Bitkom President Berg.

The concrete implementation

Start-ups as a whole are to become more central, the draft states. The federal government will "drive forward the networking of all relevant players in the start-up ecosystem." To this end, it is to set up a network of contact points for startups in all federal ministries and subordinate authorities. It will also continue regular dialogue with all relevant groups, he said.

However, the draft lacks specifics in many places. Precise timeframes by when which measure should be implemented are missing. The draft only refers to the current legislative period. The strategy should now be adopted quickly, demands Bitkom President Berg. It also needs to be backed up more strongly with concrete measures and timeframes. "Even in past legislative periods, there was no shortage of promises to startups - but they were often not kept. The ambitious plans now presented must not be ground down in the political minutiae, but must be fully implemented."