The narrative suggests that Germany lags behind its European neighbors in building capital markets for competitive global enterprises. But I think the next five years will be huge for the capital sector of German enterprises and the signs for the future are very positive. German startups raised €6.4 billion in 2020, which is more than France. Another emergence is that the market at the initial stage has a healthy mix of local and international investment.
German funding affects investment in German startups at this stage of the seed and series. As companies grow, foreign investment plays a huge role – half of the $50 million fund deals are handled entirely by foreign investors, while only 5% are managed by German investors and 45% see a mix of foreign and domestic investors. I think there needs to be a German VC market right now to be a great innovation being encouraged and supported by local funds.
As these companies grew they became winners, they attracted the best investors from around the world, enabled companies to internationalize from a German base, and in the early stages, VCs collected awards and continued to invest in local German talent. As the market matures I am confident that we will see more German vice-chancellors invest in the economic stage.
And the outlook is favorable. The German market is prospering. Even the epidemic has not affected this fundamentally positive trend for the technology sector. In addition to the growing level of both local and international investment in local technology, policymakers have created a more favorable situation for improving startups and VC funding in Germany.
The German federal government has launched a €10 billion futures fund and pledged additional funding to the Deep Tech Futures Fund. Not only does it inject more capital into the market immediately in the growth phase, but it also indicates that Germany is “open to business”.
It sends a clear signal to the world that Germany understands the link between innovation and real development in society. It is a strong and welcome indicator of funds around the world.