KfW Research: Sentiment among venture capital investors in Germany has plummeted

• Global economic and geopolitical uncertainties weighed on venture capital business sentiment in 2025
• Investors remain pessimistic about opportunities for exiting start-ups
• Economic upswing may stimulate exit market

Sentiment among investors in the German venture capital market deteriorated in the final quarter of 2025. The venture capital business climate index dropped to -32.4 points, down on the previous quarter when it was on the long-term average level represented by the zero line. Business sentiment is calculated as the average of situation assessments and six-month business expectations of venture capital (VC) investors, both of which declined in the fourth quarter of 2025.

VC business sentiment was extremely volatile in 2025. After recovering at an almost steady pace between 2022 and 2024, sentiment among venture capital investors fell sharply in 2025. This has to do in part with global economic and geopolitical uncertainties. Another reason for the drop is that investors are dissatisfied with the options they have for exiting from their investments in young innovative enterprises in Germany. The exit environment remained on an exceptionally low level towards the end of the year, at -44.9 points. However, the positive growth expectations for the German economy overall are a silver lining for the exit environment as well because the economic climate correlates very positively with the exit environment.

This is one of the findings of the VC Barometer which KfW Research and the German Private Equity and Venture Capital Association (BVK) prepare jointly on a quarterly basis to gauge the sentiment of venture capital investors in Germany.

Investor sentiment around the fundraising environment in Germany – the opportunities for raising capital – fluctuated wildly in 2025 as well. In the final quarter the fundraising environment shed 28.7 points, dropping to -34.2 points.

“The downturn in business sentiment in the German venture capital market at the end of 2025 is not only surprising but surprisingly strong,”

said Dr Dirk Schumacher, Chief Economist of KfW.

“The total investment volume of EUR 7.2 billion in the German venture capital market in 2025 was extremely high. But the persistently weak exit environment appears to weigh heavily on investor sentiment. Nonetheless, I believe that a clear economic recovery is likely in Germany in 2026. Hopefully, this will improve exit opportunities as well.”

For Ulrike Hinrichs, Executive Board Member at the German Private Equity and Venture Capital Association (BVK), the downturn in sentiment towards the end of the year came unexpectedly as well, “particularly after the previous quarter had generated optimism. But investors respond sensitively to geopolitical uncertainties and persistent market challenges. How the market develops in 2026 will essentially depend on when the exit and fundraising environments finally recover,” added Hinrichs.

^{Note: KfW produces the quarterly German Venture Capital Barometer in cooperation with the German Private Equity and Venture Capital Association (BVK) for the Handelsblatt business daily. For detailed analyses with data tables and graphs on the development of business sentiment in the venture capital and private-equity segments, go to www.kfw.de/gpeb.}