KfW Research - Dossier
Financing with venture capital creates a key requirement for start-ups to be able to open up markets and generate growth with new technologies and innovative business models. The venture capital market therefore plays an important role in the competitiveness of the economy. The German venture capital ecosystem has continued to mature in recent years but there is still a need to catch up in an international comparison. KfW Research analyses the German venture capital ecosystem and, in addition to topic-related publications, offers a quarterly barometer on business sentiment among German investors and a dashboard on the development of the German venture capital market.
Sentiment in the VC market continues on its path of recovery. The sentiment indicator for the early-stage segment improved by 10.6 points to -8.9 balance points in the fourth quarter of 2024. Thus, the business sentiment ‘traffic light’ is about to jump from red to amber. Both subcomponents of the sentiment indicator, situation assessments and business expectations, rose at a similar rate.
Just before rising above its long-term average, sentiment in the German private equity market fell again. In the second quarter of 2024, the sentiment index declined by 20.6 points to -23.4 balance points. A similar drop was already recorded a year ago, in the second quarter of 2023. Assessments of the current business situation in particular were much worse again, after improving noticeably just in the previous quarter.
The German venture capital market continued trending sideways in the second quarter of the year. German start-ups raised around EUR 1.8 billion in 187 funding rounds in total. The second quarter almost matched the first quarter of the year in terms of deal volume. As was already the case in some of the previous year's quarters, the largest financing round in Q2 2024 was a growth financing transaction in the technology field of artificial intelligence.
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