German tech leaders are cautiously optimistic about new measures proposed in the government’s new coalition agreement to boost the country’s startup sector, which could see billions more funding for late-stage companies and a slashing of red tape.
On Wednesday, the German Christian Democrats (CDU) sealed a coalition deal with the Social Democrats (SPD), unveiling a 146-page coalition agreement with proposals for all areas of society, including tech.
Investors and founders tell Sifted that the recognition of startups as “hidden champions” and “the DAX companies of tomorrow” is a welcome signal of startups’ growing economic importance.
“The quality of discussion has really changed,” says Nikolas Samios, managing partner at PT1, a VC firm focused on real estate, infrastructure and energy. “It sounds like the new government really understands that for Germany to become an innovative export nation, the startup ecosystem is really crucial.”
One of the headline initiatives for the tech sector is a new ‘Germany Fund’, which plans to provide at least €10bn in federal funding to plug the growth-stage gap. With the help of private capital, the government hopes to expand the fund to €100bn by 2030.
The government also announced it would extend the Future Fund, a commitment from the previous coalition to invest €30bn into the startup scene, beyond the 2030 time frame set by the last government.
There’s also a pledge to double the size of the WIN initiative — a plan to invest €12bn of public and private capital into the startup scene unveiled in September last year — to more than €25bn, something all founders and investors Sifted spoke to welcomed.
“The spirit of the overall contract is good, but the problem is the execution. It’s a good starting point, but we need to see them getting to action,” says Samios.
Cutting red tape
The agreement includes plans to make it easier to do business by simplifying and digitising the notary system.
Currently, to complete a funding round as a German limited liability company (GmbH), startup founders have to attend a notary in person with all of the investors (and their lawyers) present — a process which can often take hours and incur significant costs.
“I think that will be a big game changer,” says Gülsah Wilke, partner at DN Capital. “I know so many investors who have to postpone their travels or hire juniors just to make sure that notary appointments take place. It’s insane.”
The government also plans to make it possible to register a company in 24 hours online, as is the case in countries like Estonia and the UK.
Another proposal is the creation of a new digital ministry, exclusively focused on digitalisation and incorporating new technologies like AI into the administration — an idea floated by the German Startup Association in its Innovation Agenda 2030.
“All that should help any citizen or company in Germany, but of course startups can develop solutions for that too,” says Samios.
Miriam Wohlfarth, a Berlin-based serial fintech entrepreneur, says plans for the new ministry are welcome but that “concrete statements” are missing in its proposal.
She questions whether the digital ministry will have real decision-making power and its own budget, or will “depend on handouts from other ministries”. It’s also uncertain when the ministry will actually be created.
“A digital ministry without power and resources is like a startup without vision and funding. It takes more than just a title to truly move Germany forward,” Wohlfarth says.
Taking action
Other proposals highlighted by investors include an agreement from the state to provide maternity cover for self-employed mothers, something currently only available to full-time employees.
Wilke says it’s difficult for some women to start a company without financial support or insurance cover, especially if they have their savings tied up in a company.
She says the policy proposal is a “big step” in motivating more women to found companies — especially given Germany’s share of female founders is just 19%, according to a recent report by the German Startup Association.
The coalition agreement pledges to expand “special funding” for female founders, but details are currently sparse.
“What is crucial now is that the many sensible measures culminate in a consistent, implementation-oriented startup and innovation policy,” says Verena Pausder, chairperson of the German startup association. “Especially in a time of global uncertainty, a clear signal is needed: Germany is committed to innovation, entrepreneurship, and economic renewal.”
Read the orginal article: https://sifted.eu/articles/new-coalition-agreement-startup-measures/
