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German Venture Capital Barometer: VC business confidence returns after the coronavirus shock

Press Release from 2020-07-21 / Group

  • VC business climate reverses more than half the coronavirus slump
  • The entire VC market is gaining momentum again: all sentiment indicators have improved
  • But appetite for new investment remains subdued

The initial shock has passed, for now, after the German VC market was unsettled by the uncertain consequences of the coronavirus crisis at the end of the first quarter of 2020. Business sentiment has recovered significantly from the new all-time low. In the second quarter the sentiment indicator of the early-stage sentiment rose by 50.0 points to -11.1 balance points, reversing more than half of the coronavirus slump. VC investors’ assessments of both the current business situation and expectations have improved. The indicator for the current business situation rose by 39.1 points to -13.3 balance points, while the indicator for business expectations increased by 60.9 points to -8.9 balance points.

After consistently nosediving in the first quarter, the various sentiment indicators recovered again in the second quarter with the exception of the indicator of deal flow quality, for which the score remained steady. VC investors are breathing a sigh of relief with respect to fundraising, exit opportunities, new investment and value adjustments. With the exception of the fundraising climate, the corresponding indicators continue in negative territory, but the relief over progress made in containing the pandemic in Germany for now and apparently mastering the crisis better economically than other countries is palpable. Encouragingly, the assessment of entry valuations – an indicator that traditionally moves opposite to the others – continues to improve after rising significantly in the first quarter.

“VC investors have come out of the first shock after the outbreak of the coronavirus crisis”, said Dr Friederike Köhler-Geib, Chief Economist of KfW. “Their relief over the fact that the crisis appears to have hit many start-ups less hard than expected is palpable. Appetite for new investment has grown again. But since they now perceive entry valuations to be much more favourable than before the crisis, this may trigger new investment momentum. The stock market rally also signals that fundraising is still possible and there is no need for them to keep their powder dry as a precaution.”

“The findings show that the sector is breathing a clear sigh of relief over the way the pandemic has so far evolved”, said Swantje von Massenbach, deputy Managing Director of the German Private Equity and Venture Capital Association (BVK). “The sharp rise in venture capitalists’ business expectations in particular makes us cautiously optimistic for the second half of the year. What was helpful is that the Federal Government responded quickly to support start-ups and their investors as well. The measures of the start-up assistance package such as the Corona Matching Facility have sent out an important signal.”

KfW calculates the German Venture Capital Barometer exclusively for the Handelsblatt business daily together with the German Private Equity and Venture Capital Association (Bundesverband Deutscher Kapitalbeteiligungsgesellschaften – BVK). Detailed analyses with data tables and graphs illustrating the development of the business climate in the venture capital and later-stage segments can be retrieved at www.kfw.de/gpeb.


Portrait Wolfram Schweickhardt


Wolfram Schweickhardt


+49 69 74 31 17 78


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