Berlin Climate-neutral trucks on the roads, an AI efficiently controls the power grid, companies can easily obtain urgently needed components using 3D printing – Germany is still a long way from this vision at the moment. The Federal Ministry of Economics (BMWK) has therefore set up a new funding pot, which is now being launched and whose aim is to create a new “technology-based medium-sized company”.
According to Handelsblatt information, the first investment from the “Deeptech and Climate Fund” (DTCF) is imminent. This year, the fund wants to invest in four companies, up to 70 it should be. The BMWK has earmarked a sum of up to 30 million euros for each company. Overall, the ministry wants to make one billion euros available over the next ten years to promote disruptive green technologies.
Deeptech describes areas in which technology is used to solve scientific or industrial challenges. Above all, companies that are currently in the growth phase and need long-term investments should benefit from the ministry’s investments. A term of at least 25 years is planned for the fund.
The calculus: Because the state is on board, medium-sized companies and industry representatives who are not yet so active should also step in as financiers, who in turn could then benefit from the technologies themselves. The Deeptech and Climate Fund therefore wants to focus primarily on attracting medium-sized companies and industry, but also foundations, as investors. However, classic venture capitalists are not addressed.
Thomas Oehl, co-founder of deeptech investor Vsquared Ventures, takes a critical view of this approach. “The fund is well thought out, but in practice it still needs optimization,” says Oehl. The assumption that deeptech requires more “patient capital”, i.e. long-term investments, is not always correct. “It would be a shame if you excluded available capital from venture capitalists,” says Oehl. This has a negative effect on deep-tech founders.
Ministry wants to keep companies in Germany
On the part of the founders, on the other hand, the plans of the Ministry of Economic Affairs meet with approval. Among them is Matthias Breitwieser. His start-up Ionysis is active in exactly the area that the Ministry of Economic Affairs wants to advance. Breitwieser founded the company in September with four co-founders. They have developed a new, lower-emission technology for hydrogen-powered trucks, for example. Two German medium-sized companies support Ionysis as strategic investors with early-stage financing – with the aim of benefiting from the ideas of the start-up.
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“I think the idea of creating a kind of state seal of approval for companies is pretty convincing,” says the founder. Medium-sized companies that have never invested in start-ups before can be motivated to get involved.
The start-up officer at the BMWK, Anna Christmann (Greens), wants to use the fund to persuade companies like Ionysis to stay in Germany. “Companies should be supported in their growth so that they can establish themselves here,” says Christmann. Unlike many venture capitalists, the goal of the fund managers in the ministry should not be a quick, lucrative sale. Rather, according to Christmann, as many as possible Companies are supported until they are ready for the capital market, “in order to strengthen Germany and Europe as a business location”.
The start-up officer in the Ministry of Economic Affairs aims to strengthen Germany as a business location.
(Photo: imago images/Arnulf Hettrich)
The global market for air conditioning technology offers great growth potential. According to the “Digital Report” by the European Center for Digital Competitiveness, the total market for green tech will be around 1.2 trillion US dollars by 2030. The demand of the report is therefore: “There needs to be massive support for green tech start-ups in Germany.”
Climate protection is an important aspect of investments
Whether the money from the Ministry of Economics is sufficient to make Germany a leading location for green technologies will probably also depend on whether enough private capital can be mobilized for co-financing. A team is to be formed around the Deeptech and Climate Fund that will specifically address companies in order to win them over to joint investments.
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But that could take a while, because there is a huge shortage of skilled workers in the technology sector. Filling the management board of the fund had already taken longer than some in the start-up scene had expected.
While Tobias Faupel was already involved in the development of the Deeptech and Climate Fund, Elisabeth Schrey will join the management team in February.
Faupel and Schrey are to implement what the start-up strategy of the traffic light coalition promised in July. According to this, deep-tech companies are to be promoted that “pursue the goal of achieving climate protection goals through the efficient use of resources”. The “Deeptech Future Fund” (DTFF), which was launched by the previous government but never made any investments, should therefore be expanded to include the climate protection aspect.
In order to advance technology and at the same time enable climate protection, the ministry wants to use Germany’s locational advantages in the industrial sector and focus on hardware applications, explains Christmann.
In this way, industry and start-ups could benefit from each other. Because industry also has a treasure that is often still untapped, but offers great potential for technology applications. Fund Managing Director Schrey emphasizes: “Germany’s medium-sized companies have excellent industrial data that could be used well for process automation with the help of artificial intelligence.”
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