KfW Capital makes first commitment under Emerging Manager Facility to Nucleus Capital DeepTech Clima

• Emerging Manager Facility (EMF) is a building block of the German Federal Government’s Future Fund
• Boost for new diverse VC fund teams
• Successful investment process for Nucleus Capital completed

Nucleus Capital has received from KfW Capital the first commitment of EUR 6.5 million under the Emerging Manager Facility, a building block of the German Federal Government’s Future Fund. The fund has its registered offices in Berlin and has successfully completed the customary due diligence of KfW Capital. Nucleus Capital, which is headed by Dr Isabella Fandrych and Maximillian Schwarz, is a deep tech climate fund that invests in start-ups and innovative tech firms from the sectors of programmable biology, food technology and green industrials. Nucleus Capital had its first closing with a volume of EUR 10.4 million in March 2024, and is aiming to make its final closing with a planned target volume of EUR 40 million by the end of 2024.

The Emerging Manager Facility addresses a new target group in the VC ecosystem: young, often smaller VC funds managed by women or gender-diverse teams. They often bring new expertise, and many of them have specialised technological knowledge. But due to their often small target volume and lack of prior experience, which many investors place great emphasis on, fundraising is often a challenge for them. That is why the Federal Government has made available a total of EUR 200 million for investments in Emerging Manager VC funds via KfW Capital until 2030.

Dr Anna Christmann, MP, Federal Government Coordinator of German Aerospace Policy and Commissioner for Startups and the Digital Economy in the Federal Ministry for Economic Affairs and Climate Action:

“In order to have a diverse start-up scene made up of business founders and individuals of diverse backgrounds, we also need a diverse financing landscape. KfW Capital’s first investment under the Emerging Manager Facility of the Future Fund demonstrates that young, diverse VC fund managers can bring in new perspectives and drive key innovations with their particular outlook on new technologies. I am delighted that the Federal Government is providing impetus for emerging managers and their fund concepts together with KfW Capital.”

Dr Florian Toncar, Parliamentary State Secretary in the Federal Ministry of Finance:

“We are setting a clear signal with the first investment commitment under the Emerging Manager Facility. Business founders are an essential element of our society and economy. Particularly at a time when growth is slowing, Germany relies on the innovative strength of the clever minds who live in this country. Investments such as those now being made in a young VC fund which in turn invests in highly innovative deep tech start-ups unleashes the whole innovative potential of business founders in Germany. That is how we intend to secure Europe's technological sovereignty.”

Dr Jörg Goschin, Co-CEO KfW Capital:

“We hope the Emerging Manager Facility will provide a boost to new, diverse VC fund teams and to aspiring ones. Capital providers still do not offer enough funds for innovative start-ups and high-growth companies in Germany, which is why the VC ecosystem will benefit from a larger number of diverse fund teams. We are delighted with our investment in Nucleus Capital, whose clear climate focus will create added value not just for its investors. In the coming years, our programme will help make it easier for young and smaller VC funds with diverse management teams to gain a foothold in the VC market.”

The Emerging Manager Facility was introduced as the eighth building block of the Future Fund at the end of 2023. Under the EMF, VC funds can receive up to EUR 12.5 million and not more than 25% of the fund volume from the facility. As it does in all other programmes, KfW Capital first performs customary due diligence, and if the outcome is positive it invests pari passu with private fund investors. In general terms, VC funds can receive capital from the Emerging Manager Facility if they aspire to reach a maximum fund volume of EUR 50 million.

The Future Fund

The Federal Government’s Future Fund aims to significantly expand growth capital finance by 2030 and beyond by allocating public funds that will be consistently invested along with private capital. The various building blocks of the Future Fund will particularly benefit start-ups that are in the growth phase and have high capital requirements. Additional funds from the ERP Special Fund, the EIF, KfW/KfW Capital and, in particular, private investors will leverage substantial amounts of additional capital. KfW Capital coordinates the Future Fund on behalf of the Federal Government in close coordination with the Federal Ministry for Economic Affairs and Climate Action and the Federal Ministry of Finance. To date, ten building blocks of the Future Fund with an aggregate volume of more than EUR 10 billion have already been implemented, and further building blocks are in preparation to the tune of EUR 1.75 billion.

Further information on the Future Fund and its building blocks:

https://www.bmwk.de/Redaktion/EN/Artikel/Economy/future-fund.html

https://www.bundesfinanzministerium.de/Content/DE/Standardartikel/Themen/Internationales_Finanzmarkt/zukunftsfonds.html

https://www.kfw-capital.de/Investment-focus/Zukunftsfonds-(Future-Fund)/

Emerging Manager Facility

Further programme information can be found at: https://www.kfw-capital.de/Investment-focus/Investment-programmes/Emerging-Manager-Facility.html