KfW strengthens Germany's technological competitiveness with new venture capital product
Press Release from 2015-05-19 / Group
- Investments in venture capital fund of up to EUR 400 million over the next five years
- First funds invested in Forbion FCF III life sciences fund
KfW, in collaboration with the Federal Ministry for Economic Affairs and Energy (BMWi), is improving financing for technology start-ups and young, innovative companies with its new promotional instrument "ERP Venture Capital Fund Investments". KfW is participating in selected venture capital funds in Germany and Europe. Venture capital funds make direct investments in young, growth-oriented technology companies, thereby strengthening their equity capital. With this new promotional instrument, KfW aims to help close the gap in the supply of follow-up financing for young technology companies during the start-up and growth phase.
"We will invest up to EUR 400 million over the next five years under the ERP Venture Capital Fund Investments, thus leveraging a fund volume of around EUR 2 billion for the venture capital market. This will provide considerable impetus for improving the supply of venture capital for technology start-ups and young, growth-oriented enterprises in Germany. We are strengthening the financial base for new, forward-thinking technology solutions in Germany," emphasised Dr Ingrid Hengster, Member of the KfW Executive Board.
With this new product, KfW can invest in established funds as well as first time teams, i.e. newly formed fund companies and participate in first closings, thereby considerably stimulating the acquisition of further domestic and foreign institutional investors. The plan is for KfW to also act as an anchor investor to support the acquisition of private investors in VC funds.
In addition to industries such as e-commerce and IT which enjoy a high level of public interest, funds that focus on, e.g. biotech, life sciences, medtech or cleantech, also rank high for KfW as a promotional bank; in other words, industries that impact Germany as a technology centre over the long run.
KfW invested its first funds in the FCF III fund of Forbion Capital Partners, a life sciences venture capital company that is headquartered in the Netherlands and has an office in Munich. Forbion Capital Partners, which currently manages approx. EUR 540 million, invests venture capital exclusively in the life sciences sector (pharmaceuticals and medtech/diagnostics companies), primarily in Europe. "We are pleased to have acquired KfW as a strong and competent investor from Germany for our new fund. Germany offers excellent investment opportunities for us in all sectors of the life sciences industry. Over the last few weeks, the new FCF III fund already invested in 3 innovative companies, two of which are located in Germany," said Dr Holger Reithinger, general partner and head of the Munich office.