The German venture capital market enjoyed a record year in 2017: Private equity firms invested a total of €11.3 billion in around 1,100 companies last year—600 of which were startups. This exceeded the previous year's investment volume of €6.77 billion by two-thirds.
The spokesman of the board of Federal Association of German Private Equity and Venture Capital Companies (BVK), Joachim von Ribbentrop, about the record year 2017:
"Investments in the buyout segment in particular increased substantially compared to the previous year, albeit also supported by one-off effects. Regardless of this record result, the private equity sector once again underscored its importance as a key growth driver for startups and medium-sized companies."
600 startups received funding
A particularly successful year has come to an end for venture capital firms. Their investments in 2016 reached their highest level since 2008 at €1.06 billion.
“With 1.05 billion euros, the positive upward trend in investments was once again confirmed in the past year,”
summarizes Regina Hodits, BVK's spokesperson for venture capital. 600 startups were financed, which again accounted for more than half of all companies financed last year.
"The joint efforts of the venture capital industry and politicians to create a fertile environment for startup financing continue to bear fruit. However, it is still necessary to mobilize more capital for startup financing and the further growth of young companies in Germany,"
adds Hodits.
Fundraising remains good
With €2.98 billion in new fund capital, German companies were able to raise roughly the same amount from investors last year as in the previous year (€2.93 billion). Hodits continues:
"The funds are currently benefiting from very strong interest from institutional investors in alternative investments such as private equity. Fortunately, many venture capital funds were also able to take advantage of the favorable fundraising conditions. The commitment of the public sector is also paying off here."
Venture capital funds accounted for EUR 1.49 billion of fundraising, slightly more than in 2016. Buyout and other funds focusing on more mature companies, however, also remained just below the previous year's result, at EUR 1.49 billion.
And what happens next?
"It will be difficult to repeat this investment result in 2018, which was also driven by one-off effects. However, with stable economic and political conditions, we can expect continued brisk business. Currently, there are no indications why the current year will not be another successful one for our industry,"
looks Ulrike Hinrichs, Executive Board Member of the BVK.
In the "Private Equity Forecast," a survey of private equity firms on their expectations for the current year, four out of ten respondents expect investments in their respective market segment to increase slightly or significantly. Half of those surveyed expect investments to remain at least the same. Venture capital firms are particularly optimistic, with almost half expecting an increase in investments, compared to a good third of growth financiers/buyout firms. The companies surveyed paint a similarly positive picture with regard to their exit expectations.
