This is what the draft German start-up strategy says

In its coalition agreement, the traffic light coalition already announced that it would provide more support for start-ups. The draft now presented by the Ministry of Economic Affairs contains a whole series of suggestions for improvement.

It was a small Whitsun gift that the Federal Ministry of Economics (BMWK) presented to the German start-up landscape on Friday: Germany is getting a start-up strategy. The first draft by Minister Robert Habeck (Greens) is 28 pages long. 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, for example. 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 start-up scene were partly enthusiastic. "We expressly welcome the fact that the federal government has already started work on a comprehensive Start.up strategy in its first 100 days in office," says Christian Miele, Chairman of the Board of the German Start-up Association. The draft now available sets the right priorities to improve the conditions for start-ups in Germany.

Achim Berg, President of the digital association Bitkom, also praised the Ministry of Economic Affairs' draft. "The federal government has recognized this: Germany will only master the transition to a digital and data-driven economy with young, innovative and, above all, courageous tech start-ups," he said. "The start-up strategy addresses a number of areas in order to put Germany on an equal footing internationally as a start-up location."

Although the draft strategy still has to be coordinated with other ministries, such as the Ministry of Finance or the Ministry of Labor, before the final version can be released, the first version already makes it clear which points the federal 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. This is because there is still a gap, especially when it comes to the large financing rounds shortly before an IPO. "Foreign investors - especially from the USA and Asia - set the tone, particularly in the later-stage segment and therefore in larger financing rounds. For example, 63 percent of the 20 largest European scale-ups are financed by US investors," the draft also states.

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

However, the draft is still quite vague in many areas. "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. The federal government will also review the requirements for IPOs, the aim is to adapt legal regulations to international standards and modernize the listing regulations. "The announced further development of public financing instruments will make it easier for start-ups to access capital in the scaling phase," says Miele from the Start-up Association.

If the BMWK has its way, start-ups should also receive venture capital from pension insurance companies and pension funds. This has hardly ever happened in Germany so far. The prospect of a stronger capital market orientation of statutory and private pension schemes 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 for them. The previous federal government consisting of the CDU/CSU and SPD already addressed this issue in its Fund Location Act . This increased the tax-free allowance from 360 euros to 1,440 euros. Employees also only have to pay tax on their investment after twelve years or if they change employer. This was not enough for start-up representatives. The start-up association spoke of a "pipe burst", among other things.

If the BMWK's draft goes through, the situation for German start-ups should improve significantly. The twelve-year period is to be extended. The Federal Government also wants to examine whether a change of employer must always lead to taxation. The tax-free allowance would increase again. It is also about a practical "solution". This would make it much easier for start-ups to attract the talent they urgently need, says Bitkom President Berg.

The concrete implementation

The draft states that start-ups as a whole should be given greater focus. The federal government will "promote the networking of all relevant players in the start-up ecosystem". To this end, it should set up a network of contact points for start-ups in all federal ministries and subordinate authorities. It will also continue the dialog with all relevant groups on a regular basis.

However, the draft lacks specifics in many places. There are no precise time frames for when which measures should be implemented. The draft only mentions the current legislative period. The strategy should now be adopted quickly, demands Bitkom President Berg. It also needs to be backed up even more with concrete measures and timelines. "Even in previous legislative periods, there was no lack of promises to start-ups - but they were often not kept. The ambitious plans that have now been presented must not be squandered in political minutiae, but must be implemented in full."