History and Evolution

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German VC fund rose sevens folds between 1985 and 1996; from DM 1 billion to DM 7 billion per year, owing to the high investments from private equity firms. Finally in 1997, Neuer Markt provided a new, highly liquid, and profitable exist way for the investors contrary to former exist routes; trade sales and buy backs. The best way to evaluate the efficiency of the whole VC cycle is the extent of successful IPOs on the equity market. These events brought positive changes in the whole VC environment and reasonable success was achieved. Since then, German VC market had faced several challenges especially lack of funds during early stages during early 2000s.

With the commencement of 21st Century the German venture capital market was struggling as a result of the lack of capital in early stages for tech startups. The confidence in VC activities started to increase until 2007 when it was again shaken by the global financial crisis and the confidence level saw a sharp depression around -20 balance points in the last 3 quarters of 2007 but recovered rapidly.

The year 2009, was the turning point in the evolution of German VC market when for the first time in almost 44 years of its commencement the confidence level in venture activity was positive. In 2000s, German VC was on the rise, withstood the global financial crisis in 2007, despite a brief drop in 2015 continued to grow steady till 2019 which again shook the German venture capital industry as well as global venture capital.

However nowadays, the situation after 20 years is completely opposite since there is absence of larger funds in later stages of startup cycle and funding gaps in early stages because of the dormant behavior of institutional investors.