background
Status: 07/20/2021 10:24 a.m.
More and more so-called unicorns are emerging in Germany – start-ups that are worth a billion dollars or more. But most of them are dependent on money from foreign investors.
From Notker Blechner,
tagesschau.de
Many German start-ups also dream of what Uber, AirBnB or Bytedance have achieved: to become a so-called unicorn, valued at at least one billion euros. In the meantime, 17 German tech companies have already achieved this coveted status – including Celonis, Trade Republic, N26, Flixbus and Personio. Five were added this year alone. “2021 has a good chance of going down in Germany’s economic calendar as the year of unicorns,” believes ex-Thyssenkrupp boss Gerhard Cromme, now a member of the board of trustees of the German Start-ups Association.
Record investments in the first half of the year
In fact, according to a study by the auditing company EY, 7.6 billion euros flowed into German start-ups in the first half of the year – more than ever before. After the setback last year, “we are now seeing a corona effect in the opposite direction,” says Thomas Prüver, partner at EY. “The financing activities are exploding.”
But the prospects are not that rosy. One fifth of German start-ups complain that the situation has worsened compared to 2020. Although many young companies now get start-up capital relatively easily, they can hardly find venture capitalists for follow-up financing. One speaks of the “valley of death”. It is mainly foreign investors who give German start-ups the necessary injections of millions so that they can finally get started on the market.
Fund should attract more German venture capital
The federal government has recognized the problem and launched an extensive future fund. He has ten billion euros. Federal Minister of Economics Peter Altmaier promises to mobilize at least 30 billion euros in venture capital together with other private and public partners. According to Federal Finance Minister Olaf Scholz, the fund created the basis for strengthening the German venture capital market. The Kreditanstalt für Wiederaufbau (KfW) is responsible for the implementation and administration of the fund.
KfW boss Günther Bräunig sees the future fund as an important instrument for providing companies with sufficient capital in the growth phase. “The fund will give innovative technology companies better access to capital, particularly for growth finance,” he said at a recent conference.
Criticism from experts
Industry experts welcome the introduction of the billion-dollar fund, but do not consider it sufficient to solve the German startup dilemma. With ten different modules and a term of ten years, the future fund is designed in such a way that it only covers the first financing rounds of a start-up, complains Gerhard Cromme from the Federal Association of Start-ups. The instrument will not be sufficient to cope with the challenges of start-up financing in Germany in the long term. As an alternative, Cromme proposes a new European fund structure, the “European Next Generation Fund”, which could stabilize start-ups in the phase before an IPO.
At this stage of the financing round, many young German companies often migrate to the USA or Asia. The vaccine manufacturers BioNTech and CureVac, initially financed with German funding, went to the Nasdaq tech stock exchange and collected the necessary millions there.
Hope for pension funds and insurance
Other experts such as the well-known German start-up investor Klaus Hommels suggest loosening the rules for capital providers. German pension funds and insurance companies should be able to spread the risk more broadly when investing and invest more money in stocks, investments and start-ups. So far, most of the money from major German investors has been parked in long-term bonds that hardly yield any interest. Allianz is one of the few exceptions. Its digital subsidiary Allianz X invests through venture capital funds in young, up-and-coming companies that are still in the early stages of their development.
Most of the venture capital in Germany still comes from abroad. With large financings of over 50 million euros, non-European investments are in the majority. In nine out of ten growth financings, the leading investors come from abroad. “We are a land of ideas,” says Christine Bortenlänger, head of the German stock institute. But when it comes to funding these ideas, Germany is a developing country.
While in this country the market capitalization of listed high-tech companies only accounts for seven percent of the total economic output, in the USA it is over 60 percent. No wonder, then, that every fifth German company that went public in the past ten years did so abroad – especially in the United States.