MUNICH (dpa-AFX) - Backed by the German federal government, Germany's niche venture capital scene is courting the financial market's heavyweights. With fifteen billion euros in annual venture capital for promising start-ups, Germany's economic growth could regain momentum after years of stagnation, argue 24 funds and investors in a strategy paper presented this Monday at the 'Super Return' investor conference in Berlin, attended by Economy Minister Katherina Reiche (CDU). The primary targets are major asset managers and institutional investors.

The 24 funds have formed the 'German Venture and Growth Forum' and point to the example of the USA, whose economic growth has far outpaced that of the EU over the past 25 years. Many of today's immensely high-valued and profitable US tech giants emerged from start-ups that benefited from venture capitalists in their early years.

Main Argument: No Growth Without Venture Capital

'The widening economic gap between the USA and Europe is largely due to the lack of growth capital,' argues tech investor Alexander Kudlich. The 24 funds cite estimates suggesting that start-ups in Europe could create millions of jobs and reach a capitalization of over three trillion dollars, provided sufficient capital were available.

The initiative addresses a long-known but so far unresolved problem: In Germany, state subsidies are often available for start-ups in the founding phase. However, even for promising young companies with innovative technology, it often takes many years before they generate profits. In the meantime, these firms rely on external investors to bridge the loss-making phase.

Germany still lacks this type of financier; currently, only defense start-ups find investors effortlessly. Banks are generally out of the question as lenders because institutions only lend money to healthy companies and are prohibited from taking excessive risks. 'There is a lack of funding in all growth phases of fast-scaling tech companies,' writes Martin Blessing, the former Commerzbank CEO and current investment advisor to Chancellor Friedrich Merz (CDU), in the paper.

The Target Group Has Ample Capital

This is aimed at Europe's major asset managers, many of which belong to banking groups and insurance companies. Unlike banks, asset managers do not grant loans but invest their clients' funds in all types of bonds, equities, and other securities. One European powerhouse in this field - not explicitly named in the paper - is Allianz, whose two investment companies managed over two trillion euros in client assets at the end of the first quarter. The obstacle: asset managers are cautious in their investments, and venture capital has therefore not been part of their core business to date./cho/DP/men