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.
In the first quarter of 2024, German start-ups raised EUR 1.9 billion in 195 financing rounds. After the consolidation phase that began at the beginning of 2022, the German VC market has leveled off at the current level for several quarters. A boom in investment activity this year appears possible, particularly due to the available free funds among investors.
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