KfW Capital: Corona Matching Facility to support start-ups now available to VC funds

• Its purpose is to provide liquidity to innovative start-ups and young growth enterprises in the portfolio of VC funds to bridge the coronavirus crisis
• Financing rounds of portfolio companies of accredited private VC funds are matched with public funds via KfW Capital
• Applications can be submitted through KfW Capital

Today, KfW Capital starts the application procedure for the Corona Matching Facility introduced by the German Federal Government. The Corona Matching Facility is the first pillar of the Federal Government’s assistance package for start-ups and small enterprises. The financial assistance will support start-ups and young growth enterprises that are in the portfolio of VC funds, require funding during the coronavirus crisis and whose activities are linked to Germany. Apart from that, in order to be eligible start-ups and young growth enterprises must not already have been in financial difficulty on 31 December 2019. VC funds can match necessary financing rounds with federal funds via KfW Capital until 31 December 2020. All VC funds must have successfully performed a due diligence check for funding to be approved. The facility is available exclusively to private VC funds; information on how to submit an application can be found at www.kfw-capital.de.

“The growth path of many innovative start-ups and young enterprises has been severely disrupted by the coronavirus crisis. KfW Capital can now offer solutions based on the proven cooperation with private VC funds to enable promising companies to overcome the impact of the crisis”, said Dr Jörg Goschin, Co-CEO and Senior Managing Director of KfW Capital.

“The basic principle in matching is that the public funds from the Corona Matching Facility are always complemented by a substantial private contribution of the respective VC fund. For the financing rounds at company level, a maximum of 50% can be contributed from the public funds provided by the facility”, explained Alexander Thees, the second Co-CEO and Senior Managing Director of KfW Capital.

If VC funds apply for the Corona Matching Facility, it must be used for all eligible portfolio companies included in a financing round of the VC funds during the term of the facility (“duty to offer”). The VC funds finance their portfolio companies with the public funds at pari passu conditions. They select the financing instrument depending on the situation – equity or quasi-equity instruments – and determine the type and timing of the exit (exit, conversion, repayment). They hold the public share on a trust basis.

The funds of the Corona Matching Facility that are endowed with a federal guarantee are refinanced by KfW and passed on to KfW Capital.

Note:
In accordance with the announcement made by Federal Minister of Economics Peter Altmaier and Federal Minister of Finance Olaf Scholz, a total of EUR 2 billion is available in assistance for start-ups. As soon as the respective decisions are made by the bodies of the European Investment Fund (EIF), support under the Corona Matching Facility can be requested not only from KfW Capital but also from the EIF. The start-up assistance being offered by the Federal Government consists of the Corona Matching Facility as a first pillar, and of a second pillar for start-ups and small SMEs that are not in the portfolio of a VC fund.

Here you can get information from the Federal Ministry of Finance (only in German available) and from theFederal Ministry of Economic Affairs an Energy.

KfW Capital
KfW Capital is KfW’s venture capital subsidiary. Its product range includes participations in the co-investment fund coparion and the three generations of the High-Tech Start-up Fund, as well as its ERP VC fund investments product – which is supported by the ERP Special Fund. KfW Capital’s investments are based on KfW’s sustainability criteria and comply with the group’s Exclusion List and Sectoral Guidelines. The fund investor sets great store by the target funds’ observance of ESG criteria. Further information on KfW Capital is available at www.kfw-capital.de. There you will also find an overview of KfW Capital’s VC fund portfolio.