(Bloomberg) -- Germany pledged to help startups hit by the fallout from the coronavirus with short-term financial assistance worth around 2 billion euros ($2.2 billion).
The program is designed specifically for startups which may not be able to get the support they need from a wider package of measures the government launched last week, Finance Minister Olaf Scholz and Economy Minister Peter Altmaier told reporters in Berlin Wednesday.
“For these young, innovative companies, classic credit instruments are often not suitable,” Altmaier said. “So we're allocating 2 billion euros to expand venture capital so that financing rounds for innovative German startups can still take place.”
Read more: German Startups Join Forces to Create Virus Tracking App
Chancellor Angela Merkel's ruling coalition on Friday secured final parliamentary approval for a package worth more than 750 billion euros to address the economic fallout from the virus.
The aid initially did not extend to startups but the government later said that companies worth more than 50 million euros will be eligible. State development bank KfW also has about 500 billion euros available to provide liquidity for firms struggling with a collapse in demand.
The package announced Wednesday includes:
- More government cash for venture capital investors and funds
- KfW Capital, the European Investment Fund and coparion mentioned as examples
- KfW Capital, EIF may be given extra money to take stakes that become available
- Young startups without venture capital should have easier access to financing
Germany is following France in attempting to help startups through the crisis. The French government last week unveiled a package worth 4 billion euros, including 80 million euros for bridge funding, 2 billion euros in state guarantees for loans and the rest in tax breaks.
German startups raised a record 6.2 billion euros in financing in 2019, up by more than a third on the previous year and with more than half flowing to the booming capital of Berlin, according to an EY report published in January.
A longer-term startup fund of 10 billion euros has also been agreed, Scholz and Altmaier said.
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