Germany Startup Policy 2025: Strategies for Founders & Investors

🚀 Management Summary

Germany’s new coalition agreement sets the tone for startup and venture capital policy through 2025. Despite repeated promises around innovation, the terms "startup," "venture capital," and "growth companies" are nearly absent from the official document. This blog post breaks down the implications for entrepreneurs and investors in the DACH region and offers practical financing strategies amid a vague policy environment. Based on the Startuprad.io podcast episode and our proprietary keyword analysis, this post serves as your center for startup financing insights in 2025.

Infographic topics and space given to the respective topics in the coalition contract 2025

🤝 Meet Our Sponsor Vanta

Vanta automates security and compliance for frameworks like ISO 27001, SOC 2, and more. Say goodbye to endless spreadsheets and panic-mode audits. Over 9,000 companies—like Atlassian, Flo Health, and Quora—trust Vanta to streamline security.👉 Get $1,000 off at vanta.com/startupradio

🎥 Germany Startup Policy 2025 Video Podcast Will Go Live on Thursday, April 29th, 2025

The video is available up to 24 hours earlier for our YouTube channel members.

🎧 The Audio Podcast

You can subscribe to our podcasts here. Find our podcast on your favorite app or platform:

• Spotify

• Apple Podcasts

• Castbox

• Global Podcast Network (Formerly NY City Podcast Network)

• Good Pods

📈 Why Is Startup Financing in 2025 Especially Complex?

Coalition Promises vs Reality

Despite 126 mentions of the word “innovation” in Germany’s 2025 coalition agreement, terms like “startup,” “venture capital,” and “growth companies” appear only once each. This imbalance shows a lack of structural focus on high-growth companies. Instead, existing industry digitization and traditional R&D dominate the conversation.

The Hidden Catch: Finanzierungsvorbehalt

A key feature of the contract is the term "Finanzierungsvorbehalt"—which means all initiatives are subject to budget availability. This single clause has the power to stall or cancel many funding promises, leaving startup ecosystems uncertain.

"Innovation talk is good. But innovation funding? Even better."

💰 Startup Financing Options in the DACH Region

Equity vs. Debt: Know Your Terrain

• Equity: Angel investors, VCs, crowdfunding

• Debt: Revenue-based financing, venture debt, loans

Public Funding You Can Tap Into:

• Germany: EXIST, HTGF, Gründungszuschuss, state-level grants (Berlin, NRW)

• EU: Horizon Europe, EIC Accelerator, InvestEU

• Austria & Switzerland: AWS (Austria Wirtschaftsservice), Innosuisse

Emerging: Gründungszeit (Paid Time to Found)

Germany may offer "founder leave," like parental leave, enabling founders to build startups before quitting their jobs. This proposal could unlock latent entrepreneurial talent if implemented with the right budget.

🔎 People Also Ask (PAA)

How do startups secure funding in Germany?

Through public programs (EXIST, HTGF), angel investors, VC firms, and EU funding like Horizon Europe.

What is Finanzierungsvorbehalt and why does it matter?

It’s a clause that delays funding implementation until the budget is available—creating uncertainty for startups.

Is Germany falling behind in startup financing?

Compared to France, Spain, and Portugal, yes. Other countries are implementing faster, clearer funding strategies.

What are the best EU startup grants for 2025?

EIC Accelerator, Horizon Europe, and InvestEU are among the top funding channels for tech and deep tech founders.

How do I find investors for a tech startup?

Leverage regional pitch events, apply to accelerators, connect via LinkedIn, and explore syndicates across Europe.

🛠 Featured Snippet Optimization

What is Finanzierungsvorbehalt in Germany's coalition agreement?

Finanzierungsvorbehalt is a budget reservation clause. It means any program, no matter how visionary, is only executed if the money becomes available. For startups, it introduces uncertainty in public grant timelines and investor confidence.

🔗 More to Explore

• This Month in German, Swiss, and Austrian Startups

• Green Tech Investment in DACH

• The Founder’s Guide to Burnout Prevention

🧠 Conclusion: Strategic Steps for 2025

• Rely less on federal startup policies; explore EU and city-level funding

• Build investor readiness with strong KPIs, legal hygiene, and storytelling

• Use innovation-related keywords in your funding narratives to match public priorities

"Plan around the coalition, not with it."

All rights reserved - Startuprad.io™

Automated Transcript

Narrator Dorsey Jackson [00:00:05]:

Welcome to startuprad.io, your podcast and YouTube blog covering the German startup up scene with news, interviews, and live events.

Jörn "Joe" Menninger [00:00:20]:

Hello, and welcome, everybody. This is Joe from Soderberghter.ai, the authority on German, Swiss, and Austrian start ups. Today, we take you inside the 2025 coalition agreement between Germany's Two biggest parties, the SPD, the party of soon to be former chancellor Olaf Scholz, and former chancellor Gerhard Schroder, and the CDU, the party of Helmut Kohl, Angela Merkel, and soon to be chancellor Friedrich Ma. This deal is shaping the next four years of start up innovation and venture policy. We focus on it to see growth impulses since Germany has recently been forecasted to have the third year without growth in a row. This has never happened since 1945. But here's the catch in the contract. Start up, venture capital, growth companies appear only once.

Jörn "Joe" Menninger [00:01:13]:

Start minus up, German spelling of start up, is mentioned twice. The German word for founding, meaning, founding a company, appears 20 times, but not always in reference to entrepreneurship. For example, founding a family of local initiatives and so on. One should expect more in a 185 page document laying out the likely future policy for Germany. Meanwhile, innovation is mentioned 126 times. That says a lot. And many of these promises come with a critical footnote. They're subject to a financials voorbeheide, wonderful german word, a funding reservation clause in plain english.

Jörn "Joe" Menninger [00:01:58]:

Lots of good intentions but only if the money shows up. So in this episode, we'll go deep, how the coalition views innovation, what's missing for the start up scene, and why Germany risks falling behind unless it aligns us with execution. Special note, a numerical target, finally. I asked my assistant to make a pie chart of everything that's going on here in the 185 document pages document. And, actually, social, cohesion. Work and social dominate by four. Social cohesion makes up around 21% of the document and work and social 19, a little bit over 19%. Growth, innovation, and wealth, which includes start ups, account for just 13%.

Jörn "Joe" Menninger [00:02:57]:

Digitization and media, crucial for the start up ecosystem, account only for 5%. Here's another structural insight worth noting. All startup relevant content only begins on page 139 of a 185 page document. Within the relevant chapter, there's a focus heavy on digitization in in existing industries. Think industry four point zero, top tier academic research and general infrastructure. Germany declares it wants to become the number one digital growth company, but that ambition is buried deep after sections of industrial digitalization. Even crucial themes like cybersecurity, cloud, and big data are reduced to a single paragraph. When startups finally get their moment, the topics include startup networks, internationalization, the Grunderscheid proposal, more about that later, crowdfunding support, improved stock option models, and standardized founders contracts.

Jörn "Joe" Menninger [00:04:04]:

There's also the conceptual idea of Markzweipungnoll market two point zero, a potential new segment to encourage IPOs, but only mentioned in passing and comes without any structural or legal details. I'm sure many listeners still remember the Neurmarkt, the new market. Maybe the policy makers have learned. Let's give you a short recap about that. Launched 1996 by Deutsche Borse as a competitor of Nasdaq, listed at its peaks 300 companies and drew massive hype here in Germany, especially from retail investors. With the.com bubble burst, the segment lost massively. Many companies disappeared, and the segment was officially shut down in 02/2003, so it didn't survive the .com bubble burst. Note that there are partial different segments at Deutsche Boerse right now, but since 02/2003, a real one to one competitor of Nasdaq is missing.

Jörn "Joe" Menninger [00:05:10]:

So what's missing? A talent strategy beyond requalification, no visas, no global talent attraction framework, and little to no detail on start up scaling mechanisms, a really crucial point here in Europe. A coalition of innovation or just a word? The SBDCDU coalition agreement claims to prioritize innovation, and indeed innovation appears more than 100 times. But the real question is, what does the innovation actually mean? You'll find it linked to everything, climate, education, transportation, health tech, public administration, but you won't find a corresponding framework, timeline, or KPIs. The term is used as a strategic umbrella without a strategic spine. There's talk of innovation districts and a push to establish new regional clusters, but we've heard that before. The absence of targeted mechanisms like procurement reforms to favor new tech solutions or government backed test beds for start ups shows lack of operational muscle. Compare it to the 2021 coalition agreement, which had an explicit start up strategy. This 2021 caught for regulatory sandboxes and even committed to better stock option taxation.

Jörn "Joe" Menninger [00:06:31]:

That earlier document also helped catalyze the launch of Zukunft for a 10,000,000,000 vehicle to back growth stage funding in Germany. The government also stated that the now delayed win initiative channeling €12,000,000,000 into the start up scene until 2030. In contrast, the 2025 agreement gives us a wish list, not a strategy. For founders and innovators, this makes a big difference. Innovation talk is good, but innovation funding, even better. Startups in the shadow. Is this a policy downgrade? Let's address the elephant in the room, the near invisibility of startups in this deal. Despite Germany's growing role as a European startup hub, especially in tech sectors like enterprise SaaS, climate tech, and industrial IoT.

Jörn "Joe" Menninger [00:07:21]:

The term start up is not used frequently. Venture capital, just once. Growth companies, only one. That's it. And yet, during the pandemic, the start up BioNTech gave Germany's GDP a massive boost up to 0.5% in 2021 alone according to Reuters. Germany, the world's third largest economy at the time, benefited more from a single start up than from many traditional stimulus tools. Still, that kind of impact doesn't seem to have inspired great attention. The only tangible mention, a vague nod towards the potential introduction of a venture capital law, which, while potentially valuable, lacks substance deadlines or funding commitments.

Jörn "Joe" Menninger [00:08:05]:

This omission stands in stark contrast to the initiatives in other EU countries. France's TB initiatives has mobilized over 30,000,000,000 for late stage VC funding. Spain's startup law two point zero includes tax reliefs, fast track visa for tech talent, and simplified regulatory procedures. Portugal introduced co investment vehicles and is actively targeting international founders. VC reactions, several leading German VCs have expressed frustration. Some call it a step backwards. One went as far as to say Germany is becoming the garage of Europe where start ups are born, but scale elsewhere. Let's compare the coalition contract 2021 between SPD, the the green party, and the f t p, and the 2025.

Jörn "Joe" Menninger [00:08:54]:

'20 '20 '1 had a start up strategy, expansion of High-tech Hoonifang exists, stop auction reforms, pension fund VC investments. 2025, no current extension of High-tech Hoonifang, no founder incentives, no stock option clarity, and no mention of excess at all. The real power player. Let's talk about a recurring red flag. It means subject to budget availability. In practice, it means maybe nearly every initiative, no matter how visionary, whether it's around quantum computing, green hydrogen, or AI clusters, comes with a budgetary disclaimer. This is a big issue for start ups and VCs. Timing matters.

Jörn "Joe" Menninger [00:09:40]:

Launching product fundraising, scaling international. These are all processes that depend on predictable timelines and stable policy environment. The presence of so many conditional clauses signals to founders and investors that a government is unsure of its own financial priorities. And in a time when countries like France and Denmark are pre funding innovation programs, Germany's approach feels risky. The strategic implication, expect capital, especially international capital, to flow toward jurisdictions where the rules and resources are already locked in. Germany might have top universities and talent, but without committed follow through, founders will increasingly look elsewhere. Europe moves ahead. Germany hangs back.

Jörn "Joe" Menninger [00:10:29]:

Step back and zoom out across Europe. We're in a continental race to foster innovation economies. Governments aren't just encouraging start ups. They're competing for them. France is actively scaling France Twenty Thirty with 54,000,000,000 committed to transforming the French economy through innovations. Spain has earmarked 4,000,000,000 for AI, data, and entrepreneurship support through its next gen EU deployment. The Netherlands has introduced sovereign tech funds focused on strategic autonomy, offering co investments to deep tech start ups. Germany, it's still thinking about its next steps.

Jörn "Joe" Menninger [00:11:07]:

Despite being Europe's economic engine, it lacks the structural boldness that the move demands. This creates a start up migration risk. Berlick and Munich might continue birthing start ups, but growth, talent, and capital could increasingly concentrate in other places. More critical, in an area where innovation is linked to sovereignty, Germany's absence from the start up fast lane could become a geopolitical blind spot. What founders and VCs should do now? So what now? What should you do if you're a founder, angel, or VC in the DACH region? Leverage EU funding. Don't wait for Berlin. Apply to the Horizon Europe, the ESC accelerator, and the cross border programs for Invest EU. Align with policy buzzwords.

Jörn "Joe" Menninger [00:11:55]:

Frame your start up to fit in infrastructure innovation, energy, climate, health, AI, mobility. These get attention and potentially resources. Find funding diversity, cross border syndicates, family office networks, European fund of funds. Don't wait for the German government to fix VC access. Look for city level or lender, meaning state funding. Municipalities like Berlin, Hamburg, or Nordgren Westfalen often have faster moving programs than the federal level. Get loud and organized. Joanna found a coalition.

Jörn "Joe" Menninger [00:12:30]:

Write up ads. Post on LinkedIn, governments do respond to coordinated pushback and especially if it comes to high performing ecosystems. VC tactic, reduce exposure to start ups heavily reliant on public funding in Germany. Look towards scalable sectors and diversify your follow ons to regions with firmer start up policies. The lesson, plan around the coalition, not with it. Finally, an idea we love, paid time to found. Also, on page, well, 140, there's one proposal that genuinely caught our attention, It's the idea of offering paid leave, not unlike paternal leave, for individuals looking to found a company. The aim is to give aspiring entrepreneurs time and financial breathing room to develop their business ideas, validate the market, and build initial tracking before jumping into full time founding mode.

Jörn "Joe" Menninger [00:13:32]:

If implemented well, this could remove a key psychological and financial barrier to entrepreneurship, especially for people without existing capital or networks. It's a small mention with a big potential. Note, there's currently a way for unemployed people to get support to start a company, Konatsushos, but it is minimal and only for six month, where first time founders need much longer for the first fund to raise if ever. Therefore, we are afraid the new program will just copy the old insufficient program. Let's see if the government has a good surprise for us up their sleeves here. To sum it all up, innovation is everywhere, 126 mentions, but action is scarce. Startup venture capital growth companies just appear once. Start minus up just twice.

Jörn "Joe" Menninger [00:14:25]:

The only numeric start up related goal is buried again on page 140. Grow new company foundations from 10,000 to 15,000 per year. Note in 2024, Germany saw a 20,000 plus companies founded overall according to the status. Also, the German startup association tracked only slightly below 3,000 new startups founded in 2024. We're not sure what this refers to, but if it's startups and tech companies, count us in. Many initiatives are stalled behind vague finance financing clauses. The reform of stock options of the outgoing government was not due to liking of Germany's start up association. Some promising ideas like Koenigseid get a single paragraph without clear implementation plans.

Jörn "Joe" Menninger [00:15:20]:

Germany has a world class technical talent, strong institutions, and a respected academic base. But until solar policy reflects that foundation with real capital, real strategy, and real urgency, It risks watching the future happen elsewhere. If this episode resonated, please subscribe wherever you get your podcast. Cheers with a founder, policymaker, or investor who needs to know what's at stake, and visit startuprate.a0 for the full write up pie charts and expert analysis. Until next time, stay sharp, stay bold, and keep building smart. This has been Joe from startuprate.ao, your insider pass to what matters in DACH, tech, venture, and start ups.

Narrator Dorsey Jackson [00:16:11]:

That's all, folks. Find more news, streams, events, and interviews at www.startuprad.io. Remember, sharing is caring.