The federal government intends to improve access to capital for young companies through its new startup strategy. Federal Economics Minister Katherina Reiche (CDU) told the “Welt” (Wednesday edition) and the online magazine “Gründerszene” that while Germany is not lacking in capital, the challenge lies in its effective allocation.
According to Reiche, Germany currently allocates only about 0.15 percent of its gross domestic product to venture capital, significantly lower than the approximately 0.8 percent seen in the United States. Therefore, she emphasized the urgent need to mobilize more private capital.
In additions related to this strategy-which is scheduled for cabinet approval on Wednesday-venture capital will be formally recognized as a potential investment vehicle within private pension plans under the Pension Reform Act. The strategy document itself will also address “Venture Capital in Pensions” while citing the planned capital-backed share of the state pension.
A central focus of the strategy pertains to investment in defense startups. The government plans to facilitate direct state involvement in this sector, such as through KfW investments in drone manufacturers. Reiche asserted that startups must play a much greater role in defense and security investments, noting that Germany is among the global leaders in this field. Examples like Quantum Systems, Tytan, and Stark demonstrate the rapid capability development and practical application potential of startups.
To support this, a new mechanism will be established, enabling the federal government to invest directly in startups and scale-ups that offer militarily viable products and services. Furthermore, to bolster the capital market, the commitments of the “WIN Initiative” for venture capital shall be doubled to exceed 25 billion euros.
