The German Federal Government is expanding its investment fund for future technologies, the so-called Future Fund, with a new module: With immediate effect, KfW Capital is offering the “Emerging Manager Facility” (EMF), a program with which the VC arm of the development bank KfW will invest in smaller private venture capital (VC) funds managed by women or gender-diverse teams.
These are often very young teams entering the VC market for the first time, so-called "emerging managers." The VC funds can receive a maximum of EUR 12.5 million and a maximum of 25 percent of KfW Capital's fund volume through the EMF. As with all other programs, KfW Capital invests in the emerging managers' VC funds under the same conditions as private fund investors after successful completion of standard due diligence (DD).
“More diverse VC fund teams can create new opportunities”
The EMF is another component of the Federal Future Fund, which KfW Capital is coordinating on its behalf. Various measures to promote future technologies will be bundled under the Future Fund. A total of approximately €200 million from the Future Fund will be available for the new program until 2030. Jörg Goschin, Managing Director of KfW Capital, explains:
"With the EMF, women or gender-diverse VC fund teams gain targeted, improved access to capital. With our expertise as an experienced fund investor, we are pleased to now introduce and implement this important component of the future fund in the market. To further develop the VC market, we need not only more capitalized funds but also a larger number of emerging funds, which often occupy technological niches in the market upon their market entry. More diverse VC fund teams can create new opportunities."
EMF invests sector-agnostically, and the target funds are independent in their investment decisions. VC funds with a maximum fund size of €50 million are generally eligible to receive an EMF investment. Furthermore, the teams must meet at least one of the following three criteria:
- The management team consists of at least one third female and/or non-binary persons or
- the senior investment team consists of at least 40 percent female and/or non-binary people or
- The Investment Committee, the body of the investment fund that decides on its investment activities, is made up of at least 40 percent female and/or non-binary persons.
KfW Capital is coordinating the Future Fund, which the German Federal Government approved in 2021. Around EUR 10 billion will be available until 2030 for the quantitative and qualitative expansion of existing financing options and the development of new instruments. KfW Capital coordinates the individual components of the Future Fund together with the Federal Ministry for Economic Affairs and Climate Protection and the Federal Ministry of Finance, as well as KfW, the European Investment Fund (EIF), the High-Tech Gründerfonds (HTGF), and the Deep Tech and Climate Fund (DTCF).
