To start the discussion about more political support for startups in Germany, Christian Lindner painted a sobering picture. Although there are many good founders with top ideas in the country, the framework conditions are not optimal. The VC market is too small, and the current economic situation puts additional pressure on young companies.
However, this is to change with the Future Financing Act. The law, which according to the minister will go to the Bundestag for a vote after the summer break, is intended to improve the financing conditions for startups by, for example, reducing the minimum capital required for an IPO or making it easier for institutional investors to invest in startups. Another important point for Lindner: he wants to abolish the VAT obligation for investment companies. This is a disadvantage for Germany as a business location in international competition, which leads to fund companies settling abroad – and then investing there, partly with money from the Federal Republic of Germany.
The question of the share pension
For Hanno Renner, who sat on stage not only as CEO of Personio but also as a member of the “Young Digital Economy Advisory Board” around Vice Chancellor Robert Habeck and part of the extended board of the Startup Association Germany, an important point. Because while the Canadian Pension Fund, for example, can invest in German startups, pensions in Germany are separate from the capital market. Here he would like to see more access, Renner said.
A concern that the minister could certainly endorse. However, he pointed out that direct investments were difficult for regulatory reasons. However, with the Zukunftsfonds Deutschland (Future Fund for Germany) managed by KfW and the European Tech Champion Initiative, two funds of funds are available that make the money of insurers more accessible. For him, however, it is above all important that more people get involved in the capital market.
“The share pension is coming”,
says the Finance Minister.
Svenja Lassen, Managing Director Germany of the startup investor network Gateway Ventures and founder of the Female Investors Network (FIN), spoke about a completely different funding gap. There are still too few women in the startup ecosystem, both among founders and investors. A circumstance that she is actively countering. With the FIN Academy, she has launched a 6-week online training programme that enables women to start as business angels.
How Christian Lindner wants to promote female founders
For Lindner, too, it is clear that female founders do not have worse ideas, but that they are just implemented less often. He identifies male networks as being responsible for this, which already emerge at universities and ensure that investors tend to invest in the startups of their former fellow students. The minister wants to remedy this with the funds mentioned. These have “a window exclusively for projects by female founders who do not manage the normal path on the capital market”. There are also binding diversity requirements for the investment committee.
Digitalisation and the reduction of bureaucracy were also two important topics that Svenja Lassen touched on. Christian Lindner assured her that both topics are one thing for him – and that he is committed to simplifying processes at BaFin, for example, to introducing the e-share, to strengthening the financial administration with digital tools and more. He also touched on the subject of data protection. Here he would like to see a paradigm shift, because the prevailing goal of data economy hinders the work of AI and algorithms. After all, they need sufficient data to function. Therefore, the Finance Minister advocated replacing data economy with anonymisation and pseudonymisation, and thus making the data available. He was also working on this.
The end of the journey: Which stock exchange does a startup go to?
Another point the Federal Minister of Finance wanted to discuss was the topic of exits. He was critical of the fact that many startups are potentially founded and grow in Germany, and eventually go to stock exchanges abroad, move their headquarters and ultimately pay taxes there. This happens above all because there is not enough capital in Germany to raise two- or even three-digit million rounds.
Hanno Renner agreed with this analysis and also spoke about his own experiences with Personio. The topic of IPOs will also be interesting for his company in one to three years and he is already considering the question of where one could ultimately go public. However, he also noted that as a “European patriot” he would naturally prefer a location in Europe. German solutions for issues such as the implementation of multiple voting rights, SPACS or direct listings would, however, make the decision easier for him.