KfW Capital in 2020
Responsible VC fund investor
As a wholly-owned subsidiary of KfW, KfW Capital aims to sustainably improve the provision of venture and growth capital to innovative technology companies in Germany. KfW Capital invests in German and European venture capital funds (VC funds), thereby indirectly giving innovative technology companies better access to growth capital by strengthening the funds’ capital base. Through its VC fund investments, KfW Capital is providing a boost to Germany as an innovation hub.
- Over the next ten years and with the support of the German Federal Government, KfW Capital will invest EUR 2 billion across sectors and irrespective of economic cycles in European VC funds focused on Germany, via the ERP VC Fund Investments programme.
- In cooperation with the European Investment Fund (EIF), KfW Capital is also deploying the first pillar of the Federal Government's coronavirus measures package for start-ups.
- KfW Capital attaches importance in the investment process to consideration of environmental, social and governance (ESG) criteria in the target funds and their portfolio companies.
In consultation with the Federal Ministry for Economic Affairs and Energy and the Federal Ministry of Finance, KfW Capital assumed responsibility for structuring and coordinating the Federal Government's Future Fund approved by the Bundestag in December 2020 and aimed at providing further substantial improvement to venture capital financing in Germany. The Future Fund, which is to invest around EUR 10 billion in the VC ecosystem over the next ten years, is intended, in particular, to also gain new investor groups for the venture capital asset class.
Reliable VC market partner even during the COVID-19 crisis
KfW Capital further expanded its role as a reliable partner for the VC market during the challenging past year. Commitments by the KfW Capital business sector amounted to a total of EUR 871 million (including EIF commitments under the Federal Government's coronavirus measures package for start-ups). The commitment volume of the ERP Venture Capital Fund Investments programme, which KfW Capital is implementing with support from the ERP Special Fund, was increased as planned by around 19%, from EUR 155 million to EUR 184 million. A total of twelve further VC funds investing in Germany received investment commitments last year, keeping KfW Capital on its targeted expansion course.
- As of 31 December 2020, KfW Capital's VC fund portfolio therefore comprised a total of 46 VC funds.
- The portfolio is broadly diversified in sectoral terms. Around 70% of the fund volume is focused on ICT, life sciences and industrial technology, and around 30% is invested across sectors.
- With EUR 781 million in capital committed via KfW Capital, the cumulative commitment volume of these VC funds investing in Germany amounts to over EUR 10 billion. This means that the VC funds have already funded more than 1100 start-ups and young tech companies in total.
First pillar of the Federal Government's coronavirus measures package for start-ups
KfW Capital is also implementing the 1st pillar of the Federal Government's start-up aid measures in cooperation with the EIF, which includes the “Corona Matching Facility”. Since 14 May 2020, European VC funds have been able to supplement VC fund financing rounds at the same terms with resources from the aid programme in order to support their start-ups. VC funds, like the High-Tech Start-Up Fund and the ERP Start Fund, can also apply for pillar 1 funding. Total commitments of EUR 685 million were made under pillar 1 by 31 December 2020 (including EIF but not ERP Start Fund). Including the ERP Start Fund, commitments totalled EUR 714 million. The VC funds aim to support around 300 start-ups during the crisis with these resources.
The information contained in this online Annual Report 2020 is based on KfW’s Financial Report 2020, which you can download Should this online Annual Report 2020, despite the great care taken in preparation of its content, contain any contradictions or errors compared to the Financial Report, the KfW Financial Report 2020 takes priority.