The BMWK commissioned Technopolis Group to implement the first evaluation of the ERP/EIF fund of funds. The evaluation examined the medium to long-term effects of the ERP/EIF fund of funds on the supply of equity capital for technology-oriented SMEs on the German venture capital market and made recommendations for the continuation and development of the instrument. Within the evaluation’s analysis the team carried out a comprehensive interview program and a comparative group analysis, among others.  

ERP/EIF fund of funds 

The ERP/EIF fund of funds, which was initiated in 2003 together with the European Investment Fund (EIF), is a central element of the German governments’ promotion of the venture capital market. From 2003 to 2023, the fund of funds invested in more than 130 venture capital funds. In total, the German Federal Ministry for Economic Affairs and Climate Action (BMWK) provided more than EUR 2.3 billion from the ERP Special Fund for venture capital funds with a focus on technology companies.  

With the fund of funds, the Federal Government is pursuing the goal of strengthening the German venture capital market in the long term, creating an incentive to raise additional funds from private sector investors and supporting the expansion of the equity base of high-tech SMEs in Germany. 

Evaluation results 

The results show that the ERP/EIF fund of funds has established itself as an important player in the German VC market over the last 20 years and has made a significant contribution to the total investment volume. The ERP/EIF fund of funds plays an important role in the German financing landscape for both initial and follow-up financing. As the largest single market participant, the ERP/EIF fund of funds in Germany acts as a stabilizer in a crisis-prone market.  

The positive effects of the ERP/EIF fund of funds are particularly strong for newly established fund management teams. This is where the EIF’s role as an anchor investor and the associated “seal of approval” have a greater impact. The fund of funds is regularly part of the first closing of an investment fund and thus increases the probability of success of the fundraising. However, investments in newly established fund management teams (first-time funds) often fail due to the high requirements for references (track record), due diligence and minimum capital resources, which is why fundraising often only begins in the second or even later fund generation.  

In general, the ERP/EIF fund of funds has advantages over other types of financing support instruments. In particular, it can draw on the management expertise of the EIF, has good scalability and can provide targeted and rapid support for fund managers and start-ups. 

Read the report 

Learn more about the findings and recommendations of this evaluation here

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