“Germany could close the funding gap facing its promising tech companies—relative to the United States—by using private capital.
To achieve this, German institutional investors would simply need to invest two percent of their capital in European venture capital and growth capital funds.
This is the conclusion of a report by the newly formed "German Venture and Growth Forum," an association of 24 major German venture capital investors. The group includes firms such as HV Capital, Earlybird, and Project A.
The group’s members hold stakes in companies such as the Cologne-based AI translation service DeepL, the Bavarian rocket manufacturer Isar Aerospace, and the fusion energy companies Marvel Fusion and Proxima Fusion. The association’s inaugural event took place on Monday during the SuperReturn conference in Berlin, attended by figures including Economic Affairs Minister Katherina Reiche (CDU).
Start-ups with innovative business ideas often take years to become profitable and must invest heavily in developing novel products and services. To fund this, they frequently sell equity to venture capital investors who aim to profit later from a sale or an initial public offering (IPO) of the company.
"The widening economic gap between the US and Europe is largely due to a lack of growth capital," says technology investor Alexander Kudlich, who long served on the board of the investment firm Rocket Internet and played a pivotal role in shaping Germany’s start-up scene during the 2010s.
Major American tech corporations would not have emerged without venture capital investors, Kudlich argues.
"We have the talent, the scientific foundation, and the industrial infrastructure to produce global technology leaders," says Benedikt von Schoeler, co-founder of the venture capital firm Vsquared. Sufficient growth capital is now needed so that "global market leaders can continue to emerge from Germany and create long-term value," he adds.
Last year, just under seven billion euros flowed into start-ups and scale-ups—that is, companies that are somewhat more established growth-stage tech companies.
According to the investors' calculations in the report, this figure represented 0.15 percent of gross domestic product (GDP). In contrast, investors in the United States put just under 0.8 percent of GDP into start-ups and scale-ups.
Furthermore, 70 percent of growth capital in the United States originates domestically. The situation is different in Europe: while 80 percent of funding in the early stage—rounds ranging from zero to 15 million euros—comes from within Europe, European companies rely on American investors for larger rounds exceeding 100 million euros.
Over the past five years, US investors have contributed just as much capital to such rounds as their European counterparts. In the report, German investors warn that this trend causes entrepreneurial control and potential returns to increasingly shift to other markets.
Calculations indicate that Germany falls short by nearly 30 billion euros annually in matching the volume of growth investments seen in the United States relative to economic output. To achieve a level of autonomy comparable to that of the US, 15 billion euros of that amount would need to come from Germany, for instance, and six billion from other EU countries. [1]
For some time, the German government has been attempting to close the funding gap for German start-ups using private capital through the so-called WIN initiative. Under the coordination of the KfW development bank, major banks, insurers, and industrial groups—such as Allianz, Commerzbank, and Henkel—have pledged to invest 12 billion euros in future-oriented sectors by 2030. However, as of April 2026, only 2.6 billion euros have actually been invested; the target of 15 billion euros per year remains a long way off.
Nevertheless, the new alliance of start-up investors sees a realistic path toward that 15-billion-euro figure: investors need to take on more risk. Over the past decade, German institutional investors have invested an average of just under 400 million euros in venture capital and growth capital fund.
This amounted to 0.1 percent of their assets under management.
However, the German investors argue that many professional American investors allocate two percent of their capital to the venture capital asset class.
If German institutional investors were to likewise invest two percent of their €2.8 trillion in assets under management in venture capital, this would amount to €56 billion—and, spread over a fund's typical four-year term, would thus nearly cover the missing 15 billion euros.
There are reasons why institutional investors—such as insurers or foundations—have so far held back from investing in venture capital funds. Insurers, in particular, often cite European regulatory rules known as Solvency II; investments in start-ups are considered risky. The investor alliance counters that while direct investments in start-ups may be risky, European venture and growth capital funds have historically delivered annualized net returns of 14 to 18 percent.
With a portfolio size of 100 start-ups, negative returns are considered highly unlikely.
Furthermore, the asset class exhibits low correlation with public equity and bond markets and offers significant diversification potential.
One factor hindering increased investment in venture capital is the relative illiquidity of such investments. Distributions often do not occur until six or seven years have passed. In recent years, funds have frequently had to extend their lifespans because the scarcity of IPOs and strategic sales made it difficult to monetize their holdings. The volume of "exits" in Germany fell by two-thirds in 2025 compared to the previous year, according to data from the consultancy firm Interpath.” [2]
You, Germans, don’t have enough cheap and stable energy for AI development, that is basis of the economy. This is a political problem, that only electing AfD into power could solve. Money will not help here. The electorate must lose patience and make a move.
Germany faces major energy challenges for technology and artificial intelligence growth due to high electricity prices and grid constraints following the nuclear phase-out and shifting from the Russian fossil fuel dependency (idiotic Zeitenwende).
Energy Challenges in Germany
• High Electricity Costs: Industrial electricity prices in Germany remain among the highest in Europe, driven by taxes, levies, and the cost of transitioning to renewable energy.
• Grid Capacity: The transmission infrastructure needs massive upgrades to transport wind power from the north to industrial centers in the south.
• Baseload Supply: The closure of nuclear power plants and the planned phase-out of coal create gaps in stable, round-the-clock power generation required for heavy industrial and data center loads.
Political and Economic Debates
• Alternative Approaches: Critics of current energy policies argue that regulations slow down industrial competitiveness. Proposed solutions range from reopening energy debates to massive state subsidies for grid expansion and industrial power caps.
• The AfD Position: The Alternative for Germany (AfD) party advocates for reversing the green energy transition, lifting sanctions on Russian gas imports, and keeping coal and nuclear plants online to lower prices.
• Alternative Perspectives: Mainstream economists and other political parties argue that abandoning renewable goals would increase long-term climate risks and isolation from European markets. They favor accelerating wind, solar, and hydrogen infrastructure investments instead. This is so expensive that could be called fairy tale solution.
1. That adds up to 21 billion. Where will you get 9 billion more, to make needed 30 billion?
2. Der 15-Milliarden-Euro-Plan: Deutschen Start-ups fehlt oft Kapital, um international mitzuhalten. 24 der prominentesten Investoren in Deutschland wollen das ändern. Frankfurter Allgemeine Zeitung; Frankfurt. 09 June 2026: 20. Von Maximilian Sachse, Frankfurt
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