State-owned venture capital companies have gained increasing importance in recent years. The second edition of the study "The State as Venture Capital Investor" by the law firm LUTZ ABEL highlights these changes. Increasing amounts of financial resources are being made available at both the federal and state levels.
This results in an increase in the federal government's investment volume from €109 million to approximately €467 million. The individual states, in contrast, have a combined investment volume of €159 million, representing an increase of €46 million compared to 2014.
State gives money to private funds: Fund-of-funds increasingly important
Fund-of-funds structures are playing an increasingly important role. These structures involve making government funds available to private funds. This means that private fund managers, not government ones, decide on the investment in a startup. Investments are not limited to Germany. With the requirement that private funds focus on German startups, funds from across Europe receive corresponding investments.
The goal of these structures is to activate VC funds, especially for later financing phases, and thus reduce the financing gap in later stages. According to the authors, it is to be expected that the federal states' private equity firms will increasingly invest in the early stages, with later investments being made primarily through private fund investments.
NRW and Bavaria with the largest investment volume
Significant differences in investment volume are also evident among individual states. North Rhine-Westphalia and Bavaria lead the way, with €48 million and €37 million per year, respectively. According to the study, the significant gap between North Rhine-Westphalia and Bavaria and the other states can be partly explained by the fact that these states, like the federal government, invest as a fund of funds. Thuringia takes third place with an investment volume of €15 million.
