The German government would support start-ups with 2 billion euros (2.2 billion U.S dollars) during the coronavirus crisis, the Ministry for Economic Affairs and Energy announced on Wednesday.
Venture capital by the government would be expanded so that “financing rounds for promising and innovative start-ups from Germany can continue to take place,” said Minister for Economic Affairs and Energy Peter Altmaier.
In the short term, additional funds would be given to public venture capital investors. The funds could also be used in co-investments with private investors for financing rounds of start-ups, according to the Ministry.
In addition, Germany‘s umbrella fund investor KfW Capital and the European Investment Fund (EIF) would be enabled to take over shares from defaulting fund investors, according to the Ministry.
The measures were seeking to help young German start-ups and SMEs (small and medium-sized enterprises) without investors among their shareholders to find venture capital and equity replacing forms of financing, the Ministry noted.
“With a package of measures that is specially tailored to the needs of start-ups,” the government was supplementing the existing aid packages to mitigate the impacts of the coronavirus to the economy, the Ministry said.
Already, German start-ups had access to all public financing provided as part of Germany’s coronavirus aid package. However, classic credit instruments were often “not suitable to the needs of young start-ups,” the Ministry said.
“Start-ups should continue to be able to successfully tinker with their ideas even in the current crisis,”
said Minister of Finance Olaf Scholz, adding that “Germany needs innovative minds for a good future.”