German Government in Talks With Startups on Survival Package
(Bloomberg) -- The German Economy Ministry is in talks with the country’s startup association about finding ways to support early stage companies so they can survive amid the turbulence created by the coronavirus.
“We need to deliver within the next four weeks, otherwise we will see an onslaught of companies running out of cash,” Christian Miele, president of the German startup association, said by phone.
Together with the the finance ministry, the association is also holding discussions with state-owned development bank KfW on ways to provide support to young companies, said Miele.
A spokesman from the economy ministry declined to comment.
KfW will lend as much as 550 billion euros to help Europe’s biggest economy have sufficient liquidity to help get companies through the crisis, but this doesn’t extend to startups.
Miele says the newly issued stimulus package isn’t providing suitable support for startups in Germany.
“The loans are to be arranged by KfW and run through house banks, for which startup financing is absolutely not part of daily business -- a bureaucratic nightmare and simply an option that doesn’t apply for unprofitable companies,” said Miele.
Much is at stake for the startup ecosystem, which has in recent years started to thrive.
The country’s startups raised a record 6.2 billion euros ($6.6 billion) in financing in 2019, up by more than a third from the previous year and with more than half flowing to the booming capital of Berlin.
While startups in the states of Bavaria and North-Rhine Westphalia also benefited, Berlin companies raised 3.7 billion euros, an increase of 41%, according to an EY report published in January.
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