Internal hyperlinks for navigation

Article - Funding of SMEs

Financing for start-ups, company growth, and innovations


Without cash, many an idea doesn’t get off the ground. Companies need a sound financial basis for innovative business ideas. In addition to the comprehensive range of financial services offered by banks and private-sector investors, start-ups and SMEs can use a wide variety of federal funding programmes for their projects.

If the “German Mittelstand”, Germany’s SME sector, is to continue to drive a dynamic economic development, we will need more young companies alongside the established firms. Their innovations and investments will tap new markets and create forward looking jobs. Access to suitable financing is a key requirement for this.

The Federal Government therefore offers a wide range of financial services to support SMEs and members of the professions, potential entrpreneurs and innovative start-ups so that they can implement new projects, products, processes and services. In particular, a number of promotional instruments for to fund start-ups and growing companies (PDF, 255 KB) have been set up.

These programmes offer low-interest loans, venture capital and grants for start-ups and investment in growth. The aim is to support all the phases of starting out in business – from spin-offs from higher education and research establishments through to support for expansion and growth in young companies already on the market.

A key factor behind the success of start-ups and young technology firms in particular is having adequate access to venture capital. Germany needs to be internationally competitive as a location for venture capital investment. Tailor-made instruments are to implement a double strategy for funding. The instruments used for this pursue a two-fold promotional strategy: urgently needed capital is provided in the form of public funds, thus leveraging private capital.

Advice on available support from the Federal Ministry for Economic Affairs and Climate Action

The Economic Affairs Ministry’s finance experts answer questions about the funding available for new start-ups and members of the professions,

  • provide tips about what promotional programmes are available to help your project,
  • offer advice and support to help you prepare for the meeting with your bank,
  • help with financing difficulties, and
  • provide background expertise on the types of finance available (obtaining equity and outside capital, credit-worthiness issues and collateral, help with liquidity, exemptions from liability, etc.).

The Economic Affairs Ministry’s experts on financial assistance can be reached:

from 9 a.m. to 4 p.m. on Mondays to Thursdays
from 9 a.m. to 12 noon on Fridays
by phone at +49 30 18 615 8000
or by email:

Details are available online about the wide range of support available from the Economic Affairs Ministry’s database ( (in German)).

Facts and figures on financing for start-ups and SMEs


million of venture capital
has been leveraged via the INVEST programme since May 2013

Icon for meeting

% more start-up projects
have been approved under the EXIST programme since the new promotional guidelines were introduced in 2014

Office bulding-icon

have already been assisted under the High-Tech Start-Up Fund

Symbolicon für Tortendiagramm

equity stakes of the micro-mezzanine fund
have created new financial options for small and new companies


From the idea to the successful business

If good, promising business ideas are to turn into successful companies, start-ups need sufficient ways to finance them. The Federal Government offers a wide range of assistance:

Future Fund

The Federation is providing €10 billion for a venture capital fund for forward-looking technologies (“Future Fund”) at the KfW to foster the German venture capital market. The Future Fund combines a quantitative and qualitative expansion of existing funding programmes. It also comprises the development of new instruments. The aim is firstly to address all development phases of start-ups with a focus on the expansion of growth financing and secondly to give greater consideration to market segments that have previously not been sufficiently covered. The Future Fund consists of several closely linked modules which are to serve as a toolbox. Find out more here.

Assistance from the ERP Special Fund

The ERP Start-up Loans and ERP Capital for Start-ups programmes offer a tailored set of instruments to provide outside capital, offering start-ups and young companies the capital they need to launch, start growing, and transfer to a next generation.

The Economic Affairs Ministry’s ERP Start-up Loan programme offers low-interest loans to fund commercial and professional start-ups and young companies for up to 3 or 5 years after the launch. The ERP Start-up Loans programme consists of two parts: The “ERP Start-Up Loan Startgeld” (Start-Up Money) provides a maximum of €100,000 in loans to help small-scale start-ups. The ERP Start-Up Loan Universell (Universal) offers a maximum of €25 million in loans to larger start-ups. Find out more (in German).

KfW Capital

Since October 2018, KfW Capital has been investing in German and European venture capital and venture debt funds. The aim is to give young, innovative, fast-growing technology companies in the start-up and growth phase in Germany better access to venture capital from highly-capitalised funds. With assistance from the ERP Special Fund, the KfW’s existing volume of investment is to be boosted by an average of €200 million a year up to 2020. KfW Capital is an investment subsidiary of KfW Bankengruppe and a joint initiative of the Economic Affairs Ministry, the Finance Ministry and the KfW. Find out more at


Small and medium-sized enterprises generally rely on bank loans for their finance. In return, the banks require collateral, something which many SMEs lack. Here, guarantees from the Federal Government, the Länder and the guarantee banks supported by the Federal Government and the Länder offer an effective remedy for an otherwise viable project which lacks collateral. Find out more (in German).

“Business Start-ups in Science” programme (EXIST):

Higher education and research establishments are some of the most important sources of new technologies, innovative products and services. The EXIST programme cooperates with such institutions to offer a range of assistance for start-ups.

Since 1998, the Federal Government has used its “EXIST” programme to promote measures to instil a culture of self-employment and to boost the spirit of entrepreneurship at higher education and non-university research establishments. The aim is to raise awareness, motivate and qualify students, graduates and academics to start up companies and to provide them with initial funding for the seed or start-up phase.

The grants available from the EXIST programme form part of the Economic Affairs Ministry’s “High-tech Strategy” and consist of three pillars: “EXIST Start-Up Culture”, “EXIST Research Transfer” and “EXIST Start-up Grant”. The launch of the “EXIST Start-up Germany” model project has also opened up the programme to people from other countries. Find out more at

INVEST – Grant for Venture Capital

The “INVEST – Grant for Venture Capital” programme helps young, innovative companies to find someone to provide capital. Business angels get 20% of their investment reimbursed tax-free if they invest at least €10,000 in start-ups. This reduces their risk when they invest in bold ideas. INVEST improves the prospects for innovative firms to find a private investor. In this way, everyone benefits from the government support. INVEST is tailored to the target group and can therefore take even better account of the distinct features of the private venture capital market in Germany. Find out more (in German).

High-tech Start-up Fund

The Economic Affairs Ministry’s High-tech Start-up Fund supports capital-intensive technology-based start-ups. Innovative and technology-based start-ups tend to be highly complex and capital-intensive. Also, they entail particularly high market, management and technical risks. Many young technology-based companies and start-ups therefore find it difficult to obtain finance. For this reason, the High-tech Start-up Fund was set up in 2005 to invest venture capital in new German technology-oriented companies and thus to help close the financing gap in this early-phase segment. Find out more.

Further to this, there are other instruments for the financing of innovation, growth and venture capital, such as the ERP/EIF Fund of Funds, the European Angels Fund, the new coparion fund, the ERP/EIF Mezzanine Fund of Funds for Germany, the ERP/EIF Growth Facility and the ERP-VC Fund Investments. These instruments are explained in the “Financing innovation” chapter.

Micro-Mezzanine Fund Germany

The Micro-Mezzanine Fund Germany aims to strengthen the equity base and thus creates new financing possibilities for small and new companies.

Many very small companies and start-ups find that a lack of equity capital prevents them from accessing loans. In order to open up better possibilities for such companies to access finance and to increase their risk-bearing capability, the Economic Affairs Ministry set up the Micro-Mezzanine Fund Germany in 2013, which reached a total of €75 million at the end of 2015 (Fund I). A further €153 million is available for the 2014-2020 period (Fund II). The instrument, which is co-financed by the European Social Fund (ESF), provides companies with venture capital of up to €50,000 for a ten-year period, or up to €150,000 for special target groups. Find out more (in German).

German Micro-loan Fund

The Micro-loan Fund Germany is a well-established instrument for the allocation of micro-loans in response to the financing needs of small companies which would otherwise have no access to borrowing. The fund is aimed at small and young start-ups and companies, and at persons who are self-employed and pursuing a creative venture. The total loan amount must not exceed €20,000. Find out more (in German).

Wall with post-its from an Start-Up; Quelle: Getty Images/Emely

© Getty Images/Emely

Start-ups: a driving force for growth and competition

Go to Article

Corporate financing

Tailored support for SMEs

If SMEs are to remain successful in future, they need a sound financial basis. Tailor-made programmes are supporting SMEs in their projects.

KfW Entrepreneur Loan: support for investments and working capital

In the KfW Entrepreneur Loan programme, the KfW banking group funds medium-term and long-term financing of projects in Germany and abroad on behalf of the Economic Affairs Ministry. The programme is targeted at established commercial SMEs and at professionals who have been active on the market for at least five years.

ERP Regional Aid Programme: support for investments in structurally weak areas

The ERP Regional Programme supports projects in structurally weak regions. It is operated by the KfW banking group on behalf of the Economic Affairs Ministry. Structurally weak regions are defined as the German regional aid areas identified on the regional aid map of the European Commission as specially eligible areas (“c” areas). These are the eastern German Länder including Berlin and certain selected western German assisted areas.

ERP Venture Capital Programme

The ERP Venture Capital Programme is operated by the KfW banking group on behalf of the ERP Special Fund. It assists SMEs and venture capital companies. The programme is targeted at commercial companies in Germany with a group turnover of up to €50 million (in exceptional circumstances up to €75 million) a year. A venture capital provider offers these companies fresh venture capital. The maximum investment is usually €1.25 million (up to €2.5 million in exceptional cases) and can be fully refinanced.

SME investment companies: supporting SMEs

The SME investment companies (Mittelständische Beteiligungsgesellschaften), which are supported with state guarantees from the Federal Government and the Länder, work in and on behalf of SMEs. Venture capital from these companies boosts the equity base of SMEs. As neutral capital providers, these companies operate on a cross-sectoral, long-term basis. This venture capital is a flexible, SME-friendly instrument suitable for all most all reasons to seek finance. It gives competitive companies financial scope so that they can grow. Generally, the investment takes the form of dormant equity. In suitable cases, open investments are possible, but only as a minority shareholding.


Established SMEs can use guarantees from the Federal Government, the Länder and the guarantee banks supported by the Federal Government and the Länder in the same way as start-ups. Reference is made to the comments in the “Start-ups” chapter.

Investing in energy efficiency and sustainability

The Economic Affairs Ministry helps companies to invest in energy efficiency, e.g. by providing funding to develop energy-efficient products, to invest in commercial buildings, or to undertake efficient energy management. The website gives companies an overview of the support and advice available.

Other funding programmes which can also be used by existing SMEs:

A blackboard with math formulas connected to innovation policy

© – pict rider

Innovation Policy

Go to Article

Financing innovation

More money for innovative start-ups and companies

In order to manage sophisticated research and development projects and to quickly turn ideas into reality, young, innovative companies and start-ups need special support. The Economic Affairs Ministry, and the ERP Special Fund administered by it, have therefore set up various instruments and programmes.

Central Innovation Programme for SMEs (ZIM)

The Federal Ministry for Economic Affairs and Climate Action has set up the Central Innovation Programme to foster market-driven technology-based R&D work within German SMEs. The programme is designed to enhance companies’ capacity to innovate and to strengthen their long-term competitiveness.

Under ZIM, companies and the research institutes they work with can be awarded grants for ambitious R&D projects. Funding is not restricted to any particular field of technology, nor to specific fields of application. In addition, applications for cooperation networks with foreign partners can be submitted from 2018 onwards. Whether or not an application for a grant is approved depends on how innovative the project is and how marketable the results are likely to be. Find out more.

ERP/EIF Fund of Funds and European Angels Fund

The fund of funds, which is financed jointly by the European Investment Fund and the ERP Special Fund, invests €2.7 billion in venture capital funds which largely invest in Germany. Some of the funding from the ERP/EIF Fund of Funds totalling €270 million is used for the European Angels Fund, which was relaunched in 2012. The latter co-finances investment by selected, experienced business angels and other non-institutional investors investing in innovative companies.

ERP/EIF Mezzanine Fund of Funds for Germany

In order to strengthen the market for mezzanine capital in Germany, the European Investment Fund, the ERP Special Fund, LfA Förderbank Bayern and NRW.BANK have set up a joint fund: the Mezzanine Fund of Funds for Germany, which has since been supplemented by a second fund. The total volume of the fund of funds’ mandate is thus €600 million (funding from the ERP Special Fund, EIF, LfA, NRW.Bank) and it invests in private professional mezzanine funds which mainly invest in German SMEs.

ERP/EIF growth facility

The ERP/EIF Growth Facility is a cooperative project between the ERP Special Fund and the European Investment Fund, covering the field of venture capital and mezzanine finance; it provides an efficient way for fast-growing companies to access urgently needed capital for their growth. The ERP Special Fund and the EIF will cooperate with other successful venture capital fund investors in the ERP/EIF portfolio in order to set up co-investment funds that take stakes in fast-growing innovative companies. These portfolio companies must have their permanent establishment or the main focus of their business activities in Germany. There is no sectoral restriction. The investment made by the fund will be subject to the same terms as the investment made by the private-sector co-investor (pari passu). The instrument thus has a significant leverage effect.


The coinvestment fund “coparion” was set up by the ERP Special Fund and the KfW banking group, and provides funding for young and innovative companies in the same amount and on the same economic terms as private-sector lead investors. This makes it possible to double the amount of capital provided. Technology-oriented SMEs in trade and industry whose principle undertaking is in Germany are eligible to apply. The company must fulfil the criteria of the EU’s SME definition.

ERP-VC Fund Investments

In the context of the ERP Venture Capital Fund Investments, the KfW acts on behalf of the ERP Special Fund (which bears the risk), participating with a €400 million budget in selected venture capital funds in Germany and Europe. The focus is on assistance for technology-oriented start-ups and young, innovative companies. The instrument is particularly intended to target the supply-side gap in follow-up funding for young technology-based companies in the growth phase.

ERP Innovation Programme

Our ERP innovation programme is aimed at small and medium-sized companies and self-employed people working in the personal-services sector. The focus is on cooperation with research institutes. The idea here is to promote innovation and to quickly bring new practical applications to market. The ERP Innovation Programme is managed by the KfW banking group on behalf of the ERP Special Fund and serves to provide long-term financing for the close-to-market research and development of new products, production processes and services, and their further significant development.

In addition, the instruments EXIST, High-tech Start-up Fund and INVEST exist to fund innovation. Cf. the comments in the “Start-ups” chapter.

Warehouse, image regarding the subject of SME financing