Germany’s venture capital market is soaring in measures never seen before. Efraim Landa, business financing guru, has been watching the trends in Germany and can steer you in the needed direction for VC funding. Start-ups need two things to be successful, ideas and money! German businesses have both, ideas and money, so it works. German investors are pouring out more money for innovation. In countries where the economy is doing well off there are investors who can and want to buy companies. If it’s a recession in a specific country, investors will avoid risks. At this time things are going well, and Germany’s investors are doing well.
The German Private Equity and Venture Capital Association (BVK) reported that investors funded 4.5 billion euros ($6.4 billion) into businesses in 2010, 59 percent more than the year before. Germany’s big money maker is in energy, investors are big on green technology, and the government is helping in making it easier to invest in green technology.
Due to the economy being solid, and VC firms being fairly new to Germany, Uwe Walz, professor at the Center for Financial Studies at the University of Frankfurt, says the German VC market is half-way mature. In regards to VC markets being mature, Walz explains, “I wouldn’t call it that, but there are very clear developments – there are waves that bring stronger ups and downs with them.”
German VC’s market only started in the mid-90s, the first real boom in Germany was the internet industry, and this just begun at the turn of the century. Germany’s economic history shows clearly that start-ups are where it is at. Approximately 80 percent of a company’s profits come in the early stages of its life. VC firms do very well with start-up companies and get their investments back in large numbers. Another benefit is that there is money to through around. According to Ralf Hafner, of the investment bank Silvia Quandt, he feels money isn’t an issue and that is why the market is still stable.
Nothing is perfect, however. Big deals are less likely to happen in Germany. The big guys are on looking for large VC investments. According to Walz, business ownership isn’t held as high in Germany as it is in the US. Walz explains that the Germans like to make sure all of their ducks are in a row before going into business. This can be another reason why the VC market is doing so well. There is a lot of strategy that goes into investing; when this is perfected less can go wrong.
Who are the cautious ones? What firms are standing strong?
Top VC firms in Germany at $5 billion or more
- Carlyle Group specializes in Business Products and Services, Financial Services, Healthcare, IT Services, Media and Entertainment, and Telecommunications
- General Atlantic specializes in Business Products and Services, Consumer Products and Services, Financial Services, Healthcare, Industrial/Energy, and Internet Technology
- H.I.G. Capital Ventures LLC specialized in Financial Services
Fewer VC firms are mentioned as a representation of Germany’s VC market. Remembering the strategy that comes into play in the German VC market makes that just fine. The companies that are mentioned are doing very well. Germany is setting the standard in the market and they aren’t losing rank anytime soon.