Germany Is Unlocking Venture Capital for Future Technologies

Read this article to find out:

• How the Deutschlandfonds works.
• Which financing instruments it combines.
• What kind of projects will benefit.

Only a few years ago, a USD 1.2-billion (EUR 1.06-billion) funding round for a start-up in Germany would have been practically unthinkable. But in July 2026, when Quantum Systems, a defense-tech company specializing in unmanned vehicles, raised exactly that amount in a Series D round, it didn’t even set a record.

What made this and other large funding rounds possible was the German state co-investing alongside private backers through the newly established Deutschlandfonds (Germany Fund). The new fund sends a signal that Berlin is serious about attracting venture capital for future technologies.

Quantum Co-CEO Sven Kruck calls the Deutschlandfonds “a lever to strengthen Germany's position as a technology leader.” For Kruck, the fund changed everything: “The program tangibly accelerates our ability to deliver European security and future technologies on an industrial scale.”

How it works

The fund bundles a range of financing instruments – guarantees, loans, equity stakes, and venture capital – under a single umbrella structure. The government is providing around EUR 30 billion in liquidity and guarantees coordinated by the state-owned development bank KfW. The ambition is to mobilize up to EUR 130 billion in total investment: by absorbing a portion of project and credit risk, the idea is to unlock private capital that would otherwise be deemed too risky to deploy.

The fund is not limited to start-ups and scale-ups either: large corporations and mid-sized companies can also benefit. The main requirement is that projects are based in Germany. Several initial funding instruments were launched in late 2025, covering manufacturing and raw materials, energy infrastructure and geothermal energy. Further programs including modernization of energy infrastructure and support for sustainable housing construction with new loan funds for start-ups are currently in preparation.

Support for industry and SMEs 

One of the first instruments to be launched is the Raw Materials Fund, through which the government offers equity investments and KfW loans of up to EUR 150 million per project, supplemented by risk-sharing via KfW guarantees. The fund is aimed at companies planning substantial investments in Germany.

Vulcan Energy, a German-Australian firm, was the first beneficiary. It received EUR 150 million for extracting lithium from geothermal brine in Landau, in southern Germany, and constructing a large-scale lithium processing facility at the Frankfurt Höchst industrial park.

Jens Gutzmer, head of the Helmholtz Institute Freiberg for Resource Technology, explains the significance of the Raw Materials Fund. “The fund provides capital that is needed to scale critical raw materials projects that will enter the market,” he says. “It also provides a bridge between global raw material suppliers and demand in Germany's strong industrial base. And most importantly, it encourages investment by global actors in Germany – a potential that has been ignored for too long.”

New energy

In the energy sector, the Deutschlandfonds addresses two distinct challenges: the substantial investment required to modernize electricity and heating grids, and the elevated risk profile of emerging technologies such as deep geothermal energy. For geothermal projects, KfW loans of up to EUR 25 million are available per project. 

For international project developers and technology providers, this opens a clear pathway to success: collaboration with German municipalities or energy utilities on geothermal and grid infrastructure projects.

Energy economist Manuel Frondel from the Leibniz Institute for Economic Research (RWI) believes the Germany Fund will make a genuine difference: “because it cushions risk, thereby making financing more attractive to banks and private investors.”

Through the venture capital (VC) scaffolding of the Deutschlandfonds, KfW acts as a co-investor. Up to EUR 1 billion is available through 2030, with individual investments of up to EUR 50 million. A further EUR 300 million is being channeled into loan funds to finance innovative industrial technologies.

Ulrike Hinrichs, Executive Board Spokeswoman of the German Private Equity and Venture Capital Association, sees the fund as an opportunity to mobilize the capital start-ups need to scale up in Germany and to compete internationally. “Especially with 'first-of-a-kind' facilities – where development and industrial scaling coincide – it is a distinct advantage that public funds facilitate additional private co-investments and follow-on investments,” she says.

International scope

Crucially, international companies that establish a German subsidiary can also access growth financing, while simultaneously building partnerships with industry and the research community.

Jasmin Krafft, investment expert at Germany’s international business promotion agency Germany Trade & Invest (GTAI), says the fund offers international companies and investors attractive opportunities to engage early in pioneering projects in Germany. 

“The Deutschlandfonds has the potential to sustainably attract more international innovation and transformation projects to Germany,” she explains.  GTAI helps international companies navigate Germany’s funding landscape by providing tailored guidance on public financing and incentive opportunities, with an eye toward those companies expanding to Germany.