KfW Research: Better chances for start-ups to find investors

Marc Nemitz Marc Nemitz | 25.07.2024

According to KfW Research, venture capitalists are more optimistic and the key interest rate cut is providing positive impetus for the startup ecosystem

Frankfurt am Main, July 2024 - Good news for start-ups in Germany: their chances of finding investors have increased. Sentiment among venture capitalists developed positively in the second quarter of 2024, both in terms of the current business situation and future prospects. This is the result of the quarterly survey of venture capital investors conducted by KfW Research, the German Private Equity and Venture Capital Association (BVK) and the Deutsche Börse Venture Network.

While the current sentiment is still below average by historical standards, the trend is clearly pointing upwards. For the first time in two years, the outlook for the future is seen as positive again.

We perceive a mood of optimism in the German venture capital market, as the climate indicators are increasing across the board.

Dr. Fritzi Köhler-Geib, Chief Economist at KfW

Positive trend since spring

More venture capital investors reported that they found it easier to raise capital in the early summer of 2024 than in the spring. They also expect the situation to ease further in the near future. This could be linked to the European Central Bank's reduction in key interest rates and the prospect of further falls in interest rates. Lower interest rates make investment companies more attractive as they make it easier to raise capital.

The willingness of venture capital investors to invest in new start-ups increased significantly in the second quarter. Venture capitalists receive shares in start-ups in return for their financial commitment.

Since the low at the end of 2022, sentiment in the German venture capital market has been showing a strong recovery for six quarters now.

Ulrike Hinrichs, managing member of the BVK Executive Board

Ulrike Hinrichs, Managing Director of the BVK, commented: "Since the low at the end of 2022, sentiment in the German venture capital market has been showing a strong recovery for six quartersnow.On the one hand, the fact that business expectations have already returned to positive territory gives us confidence for the rest of the year. On the other hand, key indicators such as the fundraising and exit climate, willingness to invest and the economy are all showing signs of easing. Together with the optimistic assessments of entry valuations and deal flow, this should also be reflected in a further increase in investment activity and certainly larger financing rounds again. And if key interest rates continue to fall, this would give the market a furtherboost."


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