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.
VC sentiment bounced back to its path of recovery in the first quarter of 2024. Thus, although sentiment in the German VC market remained rather subdued at the start of the year 2024 as well, the improvement nearly made up for the slump in sentiment in the final quarter of 2023. The business climate indicator of the early-stage segment rose by 6.7 points to -20.5 balance points. Both subcomponents – current situation assessments and business expectations – improved at a similar rate.
Sentiment in German private equity market continues on a path to recovery. The business sentiment indicator gained 5.1 points in the first quarter of 2024, reaching -12.0 balance points. Thus, the indicator for investor sentiment is about to jump from red to amber. What is pleasing is that the positive development is attributable to assessments of the current situation, which have improved noticeably.
In the first quarter of 2024, German start-ups raised EUR 1.9 billion in 195 financing rounds. After the consolidation phase that began at the beginning of 2022, the German VC market has leveled off at the current level for several quarters. A boom in investment activity this year appears possible, particularly due to the available free funds among investors.
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