Deutschlandfonds increases raw materials and start-up investments to 1.5 billion euros

The German government had set up the fund with a volume of around 30 billion euros from public funds. Through guarantees, loans, and equity participations, the state deliberately assumes part of the investor risk. As Federal Economics Minister Katherina Reiche (CDU) explained, this is intended to mobilize additional private investments in the billions. The goal is additional investments of 130 billion euros to boost the competitiveness of the German economy.

Billions for critical raw materials

In addition to traditional industrial loans, venture capital funds that typically finance young technology companies have also been served, according to information from government circles. A total of 185 million euros is said to have flowed into such venture capital constructs. The fund aims to reduce Germany's frequently lamented lag in growth financing for young companies in recent years.

In the area of critical raw materials, the Deutschlandfonds has, according to its own statements, already entered into two participations aimed at securing lithium and rare earths. "It is intended to increase the funds for raw materials projects for the extraction, processing, and recycling of critical raw materials to a total of 1.5 billion euros," the German government and the development bank KfW announced jointly. These funds are explicitly also earmarked for recycling, in order to reduce dependencies on individual extracting countries.

Geothermal energy as a risk field

For geothermal energy, whose greatest risk lies in unsuccessful deep drilling for earth heat, a KfW development loan can be used in the future. According to information from the German government, seven geothermal projects are currently being reviewed. If these projects are implemented, they could contribute in the medium term to climate-friendly heat supply for neighborhoods and municipalities.

In start-up funding, the fund has already taken stakes in newly founded technology companies, according to information from Berlin. Which companies specifically received funds was initially not made public. By 2030, the government and KfW plan numerous further projects to be handled through the fund, according to their own statements.

New housing construction fund with KfW

Klingbeil further said on Wednesday that a housing construction fund was to be set up together with KfW: "Damit mehr bezahlbare Wohnungen gebaut werden, bauen wir zusammen mit der KfW einen Wohnungsbaufonds auf." This adds a social component to the program, as the housing shortage remains high in many major German cities.

Operational handling runs entirely through the state development bank KfW, which disburses loans, equity participations, and risk guarantees. According to Reiche, this three-pronged set of instruments is intended to ensure that even projects with higher initial risk – such as geothermal drilling or mining start-ups – gain access to capital in which private investors would otherwise be reluctant to participate.

The expansion of the Deutschlandfonds was first reported by Reuters. According to its own statements, the German government wants to use the program to attract a multiple of private investments and thus boost the competitiveness of the German economy. Observers see the fund as a central building block of the industrial policy of the current legislative term.