Germany's new startup strategy aims, among other things, to create better growth conditions for young companies in the military sector. Plans include a financing instrument that would allow the federal government to take direct stakes in such startups, according to the strategy presented on Wednesday by Federal Economics Minister Katherina Reiche. The overall focus is also set to shift beyond startups alone, extending to the growth of established young companies known as scaleups.
The defence-tech sector is "one of our most dynamic industries at the moment," Reiche told broadcasters RTL and ntv. Last year alone, the sector saw "over 1.3 billion euros in capital raised, invested, and then leveraged through public contracts." The state, she said, is "certainly not the better entrepreneur, but it is a good anchor customer."
The strategy states that the federal government will create a "new mechanism for direct federal investments in startups and scaleups" that "clearly manufacture and supply militarily usable products and services, including those falling under the list of war weapons control." SPD digital policy spokesperson Daniel Bettermann told Politico that this area holds "very, very significant potential." He added that it also concerns Germany's technological sovereignty.
Reiche also emphasized that the startup landscape "by no means relates only to the defence-tech sector," pointing instead to areas such as dual-use technology, biotechnology, and consumer sectors as well. She announced a law to be introduced by the end of the year that would "make founding a company simple through a few digital steps," including simplified business registration, automatic tax ID assignment, commercial register entry, and temporary exemption from reporting obligations.
In total, the new startup strategy proposes 152 individual measures aimed at strengthening Germany as a location for founders across various sectors. Among these is the agricultural sector, as highlighted by the Federal Ministry of Agriculture. This sector "is shaped by particularities such as biological processes, seasonal supply, and longer testing and development periods." Agriculture-related startups, therefore, often cannot generate rapid growth, meaning they require specialized support.
The automotive industry is also hoping to benefit from the new measures. "In the automotive industry, collaboration between established mid-sized firms and startups is a key success factor for the sector's transformation," said Hildegard Müller, President of the German Association of the Automotive Industry (VDA). "The strong focus on financing and growth capital is the right approach. We welcome that the strategy, alongside existing funding programs, also looks at mobilizing private capital."
"Right now, we are also seeing a boom in tech company founding," said Thomas Hoppe, Federal Chairman of the Junge Unternehmer (Young Entrepreneurs) association. "These valuable seeds need to be nurtured through good framework conditions. Otherwise, they will wither or bloom abroad instead."
He said the federal government is addressing the right areas: cutting bureaucracy, making labor law more flexible through reform of dismissal protection, improving access to capital markets, and strengthening employee stock ownership.
The digital industry association Bitkom welcomed the strategy but stressed that announcements must now be followed by action. A quarter of the legislative period has already passed, said Bitkom CEO Ralf Wintergerst, "and there are still many open questions to be resolved."
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