Deutschlandfonds: Boosting Private Investment in Competitiveness and Future Viability

Through the Deutschlandfonds, the Federal Government, in collaboration with KfW, has established a framework that makes it easier for private and local authorities to invest on a large scale in Germany. The federal government is providing public funds and guarantees totalling around 30 billion euros for this purpose. This is intended to trigger total investment of around 130 billion euros – as an investment drive alongside the government’s special fund. The Deutschlandfonds is one of the priority projects contributing to the so-called levers of the High-Tech Agenda Germany.

The Deutschlandfonds is intended to stimulate private investment in industry and SMEs, venture capital and energy infrastructure. This includes future-oriented investment in new technologies and production facilities, the expansion of renewable energies, heating networks and electricity grids, as well as the extraction of raw materials and the financing of innovative technologies in the fields of deep tech, AI and biotech, and the development of solutions to strengthen defence capabilities. KfW is responsible for coordinating the Deutschlandfonds and acts as the point of contact for advising national and international investors.

The Deutschlandfonds is aimed at industrial companies, small and medium-sized enterprises, start-ups and young growth companies, as well as private and municipal energy suppliers and companies in the defence and raw materials sectors. In order to meet a wide range of financing needs, the Deutschlandfonds is not structured as a traditional investment fund, but is designed as an umbrella structure that brings together various tailored funding components.

Industry and SMEs

Under the ‘Industry and SMEs‘ component, the Deutschlandfonds specifically facilitates future-oriented investments aimed at strengthening competitiveness. This includes, in particular, the support instrument for industries undergoing transformation, which promotes major industrial investments – such as in power generation, hydrogen technologies or the automotive industry – as well as projects by SME suppliers and in the mechanical engineering sector. In addition, the Raw Materials Fund provides equity investments and KfW loans to finance projects for the extraction of critical raw materials for the German economy, such as the development of lithium mining in Germany.

Energy

The Energy module aims to underwrite loans for electricity distribution and district heating network operators, enabling them to meet the sharp rise in investment in network infrastructure expected in the coming years. In the field of geothermal energy, the module also covers what is known as the ‘discovery risk’ – that is, the risk of failing to tap into usable hot water sources during drilling. Given the high capital requirements, it is also essential that private and municipal energy supply companies have a sufficient equity base.

Start-ups and Scale-ups

Under the Start-ups and Scale-ups component, KfW will in future also act as a co-investor, investing directly in German start-ups alongside private investors from the KfW Capital portfolio. Up to 50 million euros is available per individual investment, with a total of up to 1 billion euros by the end of 2030. In addition, 300 million euros will be allocated to investments in credit funds that finance the expansion of innovative industrial technologies. To further strengthen venture capital financing, the Future Fund will be increased and made permanent from 2026 onwards.

The additional funds from the “Wachstums- und Innovationskapital (Zukunftsfonds II)” (Growth and Innovation Capital (Future Fund II)) will be used in particular for venture capital financing in the fields of deep tech, biotech, and security and defence, whilst also helping to meet existing financing needs in the SME sector.

Further Information:

• www.deutschlandfonds.info