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Corporate Financing
Joining forces
Promoting the German innovation system
The challenges of climate change, dwindling resources,
accelerated globalisation and demographic change require
new and more efficient technologies to be continually developed.
Germany will only be able to sustainably secure its
growth potential if it succeeds in increasing overall economic
productivity in order to meet the decline in labour force. The
same holds true for increasing globalisation, to which Germany
can successfully respond if the economy retains or
even improves its competitive standing. In brief, innovation is
key if the German economy is to be viable in the future.
Enterprises are the backbone of the German innovation
system
About two-thirds of expenditure on research and development
in Germany are made by private enterprises. German
enterprises are well-known for being innovative in many
high grade technology industries (e.g. mechanical engineering,
chemical industry, automotive industry). The share
of companies which introduce new products or processes,
the so-called innovator rate, is the highest in Germany
among all European countries. However, the German economy
is lagging behind in the field of high-edge technologies (e.g.
Figure 1: Innovator rate in Europe – proportion of companies with
product or process innovation, 2006-2008
Germany
Belgium
Finland
Sweden
Austria
Denmark
Italy
Netherlands
France
42%
41%
39%
39%
49%
48%
48%
Page 8 Deutsches Eigenkapitalforum 2012
51%
Source: Rammer, Pesau (2011), Innovationsverhalten der Unternehmen in
Deutschland 2008, studies on the German innovation system.
65%
Dr. Axel Nawrath has been a member
of the KfW Management Board since
2009. Before that, he was Secretary
of State at the Federal Ministry of
Finance for three years. He has also
held positions at Deutsche Börse AG,
the Federal Fiscal Authority and the
Federal Audit Office.
bio- and nanotechnologies, microsystem technologies). We
therefore need to boost innovation in this segment.
Innovations need to be financed
Dr. Axel Nawrath, Member of
KfW’s Executive Board
Radical (basic) innovations in the high technology segment are
usually brought forth by high-tech start-ups and young technology-based
enterprises. However, they usually lack sufficient
internal financial clout. In order to finance their sometimes
very capital-intensive research and development activities,
they depend to a great degree on external, risk-bearing
equity and thus on financing partners who support them not
only with money, but also with know-how and networks.
Promotional model based on partnership – the ERP
Start Fund
As Germany’s largest promotional bank, KfW provides
start-ups and young high-tech enterprises with direct external
equity by way of the so-called “ERP Start Fund” (“ERP-
Startfonds”) – and always does so in cooperation with private
investors, venture capital funds or business angels.
Private and public investors have the same opportunities,
but also bear the same risk. The “ERP Start Fund” follows
on from the “High-Tech Start-up Fund” (“High-Tech Gründerfonds”,
in which KfW is the largest investor after the
Federal Ministry of Economics and Technology, or “BMWi”),
which can provide very young enterprises with initial