Germany announces €1.75 Billion in funding to help high-tech growth

The German government has announced plans to provide €1.75 billion in funding to support local tech start-ups. The funds will be directed towards start-ups in sectors such as AI, climate, quantum, and biotechnology, with the goal of strengthening German high-tech companies.

Robert Habeck, the Minister for Economic Affairs and Climate Protection, stated that the funding from the Future Fund aims to assist young German companies in becoming competitive in the global market. The Future Fund, which was established in 2021 as part of the European Recovery Program, will provide financing through a special fund.

In addition to the €1.75 billion in public funds, the government expects to attract a similar amount of private funding, bringing the total investment to around €3.5 billion. To encourage further investment, the government intends to reduce bureaucracy, expedite planning and approval processes, and implement measures to attract skilled workers.

Germany currently lags behind other European countries in terms of start-up financing. The availability of venture capital is particularly low, with France investing €107 per capita in start-ups, compared to around €85 per capita in Germany. In comparison, the United Kingdom and the United States are significantly ahead, with investments of €438 and €691 per capita respectively.

While the government’s funding initiative has been welcomed, experts believe that its impact might be limited. They emphasise the need for more private investment and the establishment of an efficient private capital market in the European Union for venture capital. They also emphasise the importance of the public sector acting as the “first customer” for promising innovative technology start-ups.

The breakdown of the funding includes €1.6 billion from the Future Fund, primarily focused on improving financing conditions for technology-oriented start-ups in their growth phase. An additional €850 million will be invested directly in tech start-ups, with a specific focus on AI, climate, quantum, and biotechnology. Furthermore, €500 million has been allocated to support European tech champions and prevent them from relocating to non-European markets.