The Zukunftsfonds is a package of measures from the Federal Government that is designed to strengthen the VC ecosystem. The primary aim is to enhance the funding opportunities of start-ups during the capital-intensive scale-ups phase by expanding in quantitative and qualitative terms the support architecture of the Federation. The various elements of the Zukunftsfonds will particularly benefit start-ups that are in the growth phase and have high capital requirements. The Federal Government will make EUR 10 billion available for this. In addition, the Special Fund of the European Recovery Program (ERP) and further institutions such as KfW, the European Instement Fund (EIF) and KfW Capital are involved in different elements of the Zukunftsfonds. KfW Capital, as a national, state-owned VC fund investor, was commissioned by the Federal Government to coordinate the Zukunftsfonds in close collaboration with the Federal Ministry for Economic Affairs and Climate Action (BMWK) and the Federal Ministry of Finance (BMF).
In 2021, the Federal Government decided to support start-ups even more strongly as a way to push forward the momentum, renewal and transformation of our economy in a targeted manner. The "Participation Fund for Technologies of the Future" (Zukunftsfonds) is one of the key elements of the Federal Governments's start-up strategy. The press release on the launce of the Zukunftsfonds from 24 March 2021 includes a quote from then Minister of Finance and now Chancellor Olaf Scholz:
Start-ups and their founders are drivers of innovation. They put new ideas into practice, create jobs and secure the international competitiveness of the German economy going into the future. Besides innovative business ideas and motivated staff, however, start-ups also need investors who accept the higher risk that comes with the early stage of the business. In the past years, the German venture capital (VC) market has made considerable progress and, thanks also to the numerous support programmes at federal and state level, has become more mature. Still, the VC ecosystem in Germany is rather small by international comparison and has a considerable need to catch up - especially in the growth phase addressed by the Zukunftsfonds.
The Federal Government pursues four main objectives with the Zukunftsfonds:
Further information also here: BMWK - Zukunftsfonds and BMF - Zukunftsfonds
The Zukunftsfonds consists of multiple modules that are interlinked and complement each other. They are tailored to the different financing needs which start-ups have in the various phases of their growth, particular in the capital-intensive growth phase. The fund makes capital available via the modules in different financing forms:
The Zukunftsfonds has access to EUR 10 billion in new public funds along with money from the ERP Special Fund. Together with private and public partners, the Zukunftsfonds substantially mobilises further capital with its various modules. Most of the private funds come from institutional investors, among them VC investors who are ready to take risks, but also from insurers, foundations, pension funds, and family offices with a conservative orientation.
KfW Capital coordinates the elements of the Zukunftsfonds, it is the implementer of individual modules and collaborates closely with the Ministry for Economic Affairs and Climate Action and the Ministry of Finance as well as KfW, the EIF, the High-Tech Gründerfonds (HTGF) and the DeepTech & Climate Fund.
KfW Capital is one of the largest VC fund investors in Germany and Europe. As a subsidiary of KfW Group, KfW Capital aims to strengthen the supply of venture and growth capital for innovative technology firms in Germany. It invests in German and European VC funds with support from the ERP Special Fund and the Zukunftsfonds. In this way, KfW Capital directly improves access to growth capital through major VC funds and strengthens Germany's location as an innovation hub. KfW Capital is already invested in more than 100 VC funds with a volume of around EUR 2.2 billion. Its experience and knowledge of the VC ecosystem makes KfW Capital an important national partner of the German Federal Government in matters relating to the VC ecosystem. On behalf of the Federal Government, KfW Capital also successfully set up and jointly implemented the start-up assistance with the EIF during the COVID-19 pandemic.
Nine building blocks with a volume of more than EUR 10 billion are already active. Among them are, for example, three instruments for large-volume growth financing (GFF EIF Growth Facility, ERP/Special Fund Growth Facility, ETCI) and the Wachstumsfonds Deutschland, which is one of the largest VC funds of funds in Europe with a volume of around EUR 1 billion. We were able to attract more than two thirds of the fund volume for this from private investors. Further building blocks that are already active: the DeepTech & Climate Fund and the RegioInnoGrowth programme (KfW), which has been making funds available to innovative start-ups and small and medium-sized enterprises (SMEs) via the promotional institutions of the German Federal States (Landesförderinstitute) since August 2023.
The following building blocks have already been introduced:
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