KfW subsidiary to invest: how Spiegel online reported, the German government plans to establish a subsidiary of the state-owned Kreditanstalt für Wiederaufbau (KfW). Its mission: to act as "permanent, organizationally independent structure for equity financing“ and to invest more in startups that are in the growth phase.
A new investment company—a wholly owned subsidiary of KfW Bank—will ensure that startups in Germany have easier access to venture capital. According to a report in Der Spiegel, the KfW subsidiary is scheduled to begin operations in early 2018 and will specialize primarily in equity capital. The focus will be on investments in venture capital funds and venture debt funds. With this focus, the subsidiary is intended to help close a major gap: According to the report, there is a €500 to €600 million shortfall in venture capital in Germany. According to Der Spiegel, a total of €2 billion will be invested over approximately ten years.
With this step, the Federal Government would comply with the Bundestag’s request to increase its commitment in the area of Financial support young companies – and thus ultimately fulfilling an election promise. Whether a subsidiary will actually support startups in their growth phase next year remains to be seen, as the KfW Board of Directors still has to approve the new subsidiary.
