Germany Establishes €1bn Program to Support Climate and DeepTech Startups

The German government has released a 1 billion euro DeepTech & Climate Fonds (DTCF) to promote the development of growth-stage startups in the country, with a particular emphasis on technologies related to climate change.

European governments are now firmly focusing on technological autonomy and the strategic worth of scaleups, and it is reflected in their recent pledge to promote innovation

The DTCF has committed to investing in deeptech industries such as Industry 4.0, robotics, AI, quantum computing, and process automation, as well as in businesses that are built on technology-based models such as digital health, new energy sources, smart cities, new materials, and certain biotech sectors. The fund has already made one investment, which is in the process of closing, according to a press release from the Federal Ministry of Economy and Climate Protection.

Not long ago, France declared its intention to inject an additional €500m into deeptech startups, together with a variety of other schemes to support its agritech, healthtech and climate tech industries. This initiative has been followed by the introduction of a new fund.

In recent years, Germany has taken steps to back startups. In July of 2020, the nation promised to provide approximately €30bn of extra financing by 2030 to encourage the startup sector and presented its first complete roadmap for startups - though there has not been much advancement since then.

The DTCF is financed by the introduction of the [€10bn Future Fund] by the federal government in December 2020 and the European Recovery Program (ERP).

Difference During Growth-Stage

The DTCF paying attention to businesses that have moved past the startup stage is noteworthy.

Tech proponents have decried the absence of European-grown deep-tech titans when compared to the US and China. When deeptech businesses in Europe need to raise capital beyond their Series B, they frequently have to turn to non-European investors due to the lack of growth-stage investment in Europe. This carries with it the risk of relocation and a diminished benefit for Europe from their success.

The views of the founders of Germany's most significant startups will be made known soon enough. In November, these entrepreneurs penned a letter to the German administration, imploring for greater investments, swifter visa regulations for overseas talent and an alteration of the pension plan so that the nation can remain a major hub for startups.