KfW Research - Dossier
Venture CapitalFinancing 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.
After business sentiment suffered a minor setback at the end of 2024, it recovered at least partly at the start of 2025. In the first quarter of 2025 the sentiment indicator of the German VC market rose by a moderate 2.0 points. At -2.1 balance points, the indicator thus remains just below its historic average, which is marked by the zero line. By contrast, business expectations dipped slightly at the start of the year. The increased scepticism regarding the business trend is likely to be the result of the major economic uncertainty that was generated primarily by US economic and trade policy since the start of the year.
The slide in sentiment in the German private equity market did not continue at the start 2025, which is encouraging. After business sentiment cooled, sometimes noticeably, during the three preceding quarters, the business climate index gained 3.2 points again in the first quarter of 2025. Business confidence remains stuck on a low level of -37.3 balance points. The coming quarters will reveal whether the slump has now bottomed out. As the year progresses, the increase in uncertainty in capital markets at the end of the quarter will continue to be a challenge for the German private equity market as well.
After a quiet first quarter, the German VC market picked up steam in the second quarter of 2025. In Q2 2025, German start-ups raised around EUR 2.4 billion in venture capital – significantly more than in the first quarter (+45% QoQ). The first half of 2025 thus closed with a deal volume of just under EUR 4 billion.
That means the German VC market posted a growth in deal volume for the third half-year in a row. The investments in Q2 2025 took place in 208 financing rounds thus far reported, 98 of which with an individual deal volume of over EUR 1 million.
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