The VTGF program is part of the Future Fund and was launched in 2019 with the goal of closing the gap between venture capital and traditional debt financing. Together with private debt providers, KfW has provided approximately EUR 360 million in eleven transactions to date. Of this, EUR 106 million was KfW funding and over EUR 250 million was private debt.
With VTGF 2.0, the offering is now being expanded. In the future, debt capital will also be provided to already listed companies (post-IPO debt). Equity bridge loans will also be made possible. KfW's maximum financing share in a transaction will increase from EUR 22.5 million to EUR 125 million. The German Federal Government and KfW will provide a total of EUR 1.2 billion for this purpose until 2030. However, the general rule is that financing should only be provided in conjunction with private investors.
The money is part of the future fund, which the German government wants to use to boost startups. According to the recently presented Government startup strategy A total of 10 billion euros is to be invested here by 2030. KfW is responsible for implementation. Thanks to the expansion of the VTGF, 8.2 billion euros of this amount are now available.
Carsten Pillath, State Secretary in the Federal Ministry of Finance, explains:
"The VTGF 2.0 is the consistent further development of its predecessor, VTGF 1.0, and is the only debt-based component within the Future Fund to date. This makes it possible to specifically support innovative companies in the crucial development phase leading to established companies – without restricting the autonomy of the entrepreneurs. The program represents a positive stimulus both for the previously rather weak German venture debt market and for the entire VC ecosystem in Germany."
“Important bridge between VC financing and traditional debt financing”
Udo Philipp, State Secretary in the Federal Ministry for Economic Affairs and Climate Protection, adds:
"The German government's goal is to ensure that technology-oriented startups have access to financing opportunities in Germany at every stage of their development. The Future Fund is particularly aimed at strengthening the financing options during the growth phase. Expanding the still underdeveloped German venture debt market with VTGF 2.0 plays a key role in this. Venture debt is often attractive for startups, especially in the late growth phase, and represents an important bridge between VC financing and traditional debt financing."
And Stefan Wintels, Chairman of the Board of KfW, concludes:
"As KfW, we want to make an effective contribution to ensuring the success of the transformation of the economy and society. A key element of this is the further development of our funding offerings in the area of innovation and the strengthening of the financing ecosystem for fast-growing technology companies. At the same time, the increased acquisition of private capital is a key prerequisite for the success of the transformation. With the launch of VTGF 2.0, we have reached an important milestone, which will be followed by further steps."
