KfW Research - Dossier
Financing with venture capital creates a key requirement for start-ups to be able to open up markets and generate growth with new technologies and innovative business models. The venture capital market therefore plays an important role in the competitiveness of the economy. The German venture capital ecosystem has continued to mature in recent years but there is still a need to catch up in an international comparison. KfW Research analyses the German venture capital ecosystem and, in addition to topic-related publications, offers a quarterly barometer on business sentiment among German investors and a dashboard on the development of the German venture capital market.
The VC business climate in Germany has continued to improve and has returned to the long-term average level again. The sentiment indicator for the early-stage segment rose 8.7 points to -0.4 balance points in the third quarter of 2024. Business expectations stabilised with a slight increase but situation assessments improved significantly. The indicator dot that stands for current situation assessments has now also jumped from red to amber.
Sentiment in the German private equity market has deteriorated very significantly for the second straight quarter. The sentiment indicator plunged by 19.0 points to -39.6 balance points in the third quarter of 2024, a new four-year low. The only time sentiment was worse in recent years was during the COVID-19 shock. After current business situation assessments had already fallen in the previous quarter and the outlook had not yet worsened quite as much, expectations have now dropped as well.
Going into the second half of the year, the German VC market sent out a positive signal, giving hope for a strong conclusion to the year in the coming quarter. In Q3 2024, the quarterly volume of investment in German start-ups exceeded the threshold of EUR 2 billion again for the first time in more than a year. Overall, German start-ups raised some EUR 2.5 billion from investors in 280 funding rounds.
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