News from 2022-05-10 / KfW Research
Business climate indexes for the German venture capital market
The data for the business climate indexes of the German Private Equity Barometer and the German Venture Capital Barometer are based on a quarterly survey of the members of the German Private Equity and Venture Capital Association (Bundesverband Deutscher Kapitalbeteiligungsgesellschaften – BVK), the member investors of the Deutsche Börse Venture Network (since the 2nd quarter of 2021) and further private equity companies with registered offices in Germany.
Private equity sentiment turns negative at start of year
The business climate on the German private equity market cooled off drastically at the start of the year. The sentiment indicator of the later-stage segment slipped by 27.5 points to -7.2 balance points. The escalation of the war in Ukraine and resulting high economic uncertainty were likely the main cause for the drop in sentiment. The indicator for the current business situation fell by 24.4 points to 2.2 balance points, hovering just slightly above the long-term average. The indicator for business expectations plunged by 30.6 points to -16.5 balance points.
VC sentiment plunges – interest rate reversal and war create high uncertainty
The business climate on the German Venture Capital market has fallen again two years after the coronavirus shock. The business climate indicator of the early-stage segment dropped by 35 points to 7.2 balance points in the first quarter of 2022. This was likely due to the inflation-induced accelerating interest rate reversal and the heightened economic uncertainty caused by the war. The indicator for the business situation dropped to 12.8 balance points (-33.0), while the indicator for business expectations fell to 1.7 balance points (-37.0).