Ahead of the 20th German Federal Elections on 26 September 2021 and at the end of the Merkel era, this article will discuss the impact specific election outcomes could have on start-ups with a focus on such, which are involved in contributing to socio-ecological change and digitization. After the recent flood disaster in Western Germany left the country and international community in shock, there have been speculations about the impact that this devastating event might have on the Federal Elections overall. In a nutshell, the need to address climate change and economic restructuring has become increasingly urgent.
To find out how German political parties might address the latter, among others, by changing market conditions for start-ups, have a read!
Election Promises for Start-ups at a Glance
The CDU/CSU aim to…
- strengthen the cooperation with Israel regarding the support of start-ups
- offer favourable conditions for start-ups in agriculture
- only oblige start-ups to pay taxes after they distribute profits
- facilitate the transfer of shares to other team members through the creation of a share class
The SPD aims to…
- transform Germany into one of the leading start-up hubs in Europe and increase employment opportunities in such an effort
- establish one-stop agencies for founders
- facilitate access to capital through project funding, public support for venture capital and the creation of a ‘culture of a second chance’ including in insolvency law
- set up specific funding programmes for female founders
- create a transformation platform for socio-ecological change and digital transformation where (non-exit-focused) start-ups, social enterprises, SMEs and other members of civil society meet
The Greens aim to…
- promote the expansion of funding programmes for high-tech start-ups, incubators and entrepreneurship training programmes and facilitate access to public funding
- establish a State venture capital fund, which shall enable an increased number of investments at a rapid speed through the pooling of (private) scattered donor funds
- make sure that the latter future fund will focus on sustainability and make green tech, AI, sustainable mobility, bio- and circular economy a priority
- improve the access to public funding for start-ups in the green economy and cooperate with regional green tech start-up hubs to facilitate more cooperation between start-ups and well-established businesses
- create a secondary market for direct investments and shares of venture capital funds through the set-up of a co-investment platform
- ensure that public grants and investments consider the female share of start-ups taking diversity as a further principle for all digital strategies and ensuring access for individuals with a migration background
- Establishment of a state venture capital fund for women
- guarantee that the tax incentives for research and development will more directly benefit start-ups and SMEs
The FDP aims to…
- ensure that the model of employee participation is used to the benefit of start-ups
- increase the scope of the Future Fonds (Dachfonds) for start-ups, among others, by creating more favourable conditions for venture capital investments
- found the German Transfergemeinschaft (DTG) with the goal to support technological and social innovation through a self-governing organization, which could bundle know how and support projects in cooperation with universities, businesses or CSOs
- ensure that software- and high tech start-ups and businesses benefit from the latter initiative
- secure more favourable conditions for founders of digital start-ups such as tax-based research funding, simplified bureaucratic procedures and better financing options
- guarantee that start-ups and SMEs in the aerospace sector will be included into EU projects and projects at domestic level
- secure funding for start-ups as part of the AI road-map until 2025 and secure accessible and non-bureaucratic funding for start-ups who aim to innovate the health sector
- utilize environmental policy as a driver of innovation including for start-ups and establish diplomatic relationships in the field of digitization ensuring the cooperation of start-ups in Germany with such in Silicon Valley, Taiwan, Tel Aviv, Singapore, Shenzhen and Daejeon
Whereas the German left-wing party Die Linke has announced to support start-ups who seek to contribute to the solidarity-based economy, start-ups remain largely unmentioned within the party’s election manifesto. Meanwhile, the German far-right party AfD neglects any cooperation and connection between state institutions, businesses and innovation.
The Future of Start-Ups is Digital and Green
Based on the above election promises, it is no surprise that the future for start-ups in Germany is digital and green! Both the CDU/CSU, SPD, the German Greens and the FDP are planning major investments into start-ups which contribute to socio-ecological change and/or digitization. Thereby, the German Greens and the FDP mention start-ups most frequently and have designed the most concrete and comprehensive measures to improve the conditions for founders with different backgrounds and across various sectors. For this reason, it might be interesting to understand how the electoral goals of the latter parties could impact start-ups indirectly.
The German Greens have not only planned to incorporate start-ups into a restructuring of the German economy, but have also contributed a climate investment plan as part of their electoral campaign. Planning a transition to a climate-friendly economy, the Greens aim to attract green investment capital in line with the first German Sustainable Finance Strategy. According to the press release of the Federal Ministry of Finance “The goal of the strategy is to mobilise investments that are urgently needed for climate action and sustainability while also addressing the climate risks that are increasingly relevant to the financial system”.
Especially, since the German Greens have additionally announced that they plan to revise the tight restriction on new borrowing and the debt brake, the chances for green and digital start-ups to receive public funding might dramatically increase over the next few years. Further announcing to spend 500 billion euros on the “socio-ecological transformation” of the economy, the German Greens aim to facilitate new and cheap loans from which start-ups could also benefit. Meanwhile, the FDP’s goal to link start-up hubs globally through so-called “innovation ambassadors” as well as their aim to engage start-ups in domestic and EU level projects in the aerospace sector could lead to the establishment of similar cooperational projects in other domains in the future.
The party’s idea of the creation of “digital free spaces” (Digitale Freiheitszonen) could further benefit start-ups, who might be interested in better financing, tax options and bureaucratic procedures when setting up a business. Similar to the German Greens, the FDP further puts a strong emphasis on the digitization of the health sector and AI, both of which could offer new opportunities for the participation of start-ups in public projects. Overall, a ‘Jamaica’ coalition might hence benefit start-ups according to electoral promises.
Whether you are an entrepreneur or an investor seeking to contribute to the next decade’s socio-ecological and/or digital transformation, our team of flexible on-demand lawyers can support you with the right choice of the legal form, questions about intellectual property protection as well as advice on equity investments and partnerships for start-ups.
Contact us for an initial consultation today.