Based on the German federal government's current startup strategy and its specific measures and funding programs (see Legal Insights dated March 14, 2024 for details), the federal government and KfW, together with relevant financial sector players and associations, unveiled by way of a joint declaration of intent on September 17, 2024 the so-called WIN initiative (Growth and Innovation Capital for Germany), which is aiming to strengthen Germany’s presence as a startup hub.
A package of measures was agreed upon in order to improve the tax, legal, and financial framework for growth and innovation financing. The participating companies are planning to invest an amount of around €12 billion in startups by 2030. Alongside the major German banks, insurance companies, and well-known associations, the signatories of the declaration of intent include key players like Allianz, BlackRock, Deutsche Börse, Deutsche Telekom, Bertelsmann, and Henkel. Additional companies and associations are more than welcome to join.
The 10-point package of measures includes plans to expand cooperation between universities, investors, and companies; strengthen fund-of-funds structures; enable financing solutions for “first-of-a-kind” (FOAK) financing; and improve framework conditions for IPOs and exits by shareholders.
First individual measures have already been initiated in the form of a draft Second Future Financing Act (Zweites Zukunftsfinanzierungsgesetz) and a draft Second Company Pension Strengthening Act (Zweites Betriebsrentenstärkungsgesetz). Among other things, the improvement of the tax framework for investments in venture capital and adjustments to the taxation of profits from the sale of shares in corporations when these are reinvested (roll-over) are planned. Further proposals for tax law measures are currently being examined in the light of state aid law. In addition, the quota for venture capital investments is to be increased from 35 to 40%, an infrastructure quota of 5% is to be introduced, and the coverage requirements for pension funds are to be relaxed.
KfW has been commissioned by the German federal government to coordinate the WIN initiative, which will include an annual assessment of the implementation status of the agreed measures and the financial contributions made.
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