High-Tech Gründerfonds to launch fourth seed fund

The GP held a final close for HTGF III in May 2018 on €316.5m, surpassing its target of €310m. The fund made equity investments of €1-3m in Germany-based early-stage technology startups.

As a private-public partnership, HTGF IV can raise up to €150m from private investors, meaning the fund can raise up to around €500m in total, but it expects to be a similar size to HTGF III.

Alex von Frankenberg, managing director of HTGF, told Unquote that the firm feels it is in a strong position to be raising a fund under the current market conditions. "As the crisis subsides, we are looking at a boom phase for innovative startups and technology, so it's the perfect time to invest in technology and VC funds, especially for pension funds and corporates," he said. "The timing is close to perfect."

At least 30% of HTGF IV's capital must also come from private investors, von Frankenberg told Unquote, adding that the firm has held early-stage discussions with private investors via its early adopter programme.

HTGF said in a statement that its new fund will complement the German government's investment in technology via its Zukunftsfonds, which was launched in March.

In addition to seed and early-stage funding, HTGF will continue to focus on providing entrepreneurs with access to its network of established companies.

The official fundraising process is subject to approval from the German Federal Financial Supervisory Authority (BaFin), but is expected to begin in September 2021, von Frankenberg told Unquote. The fund is expected to hold a first close in June 2022 and a final close in June 2023.

While the pandemic has presented challenges for many VCs and GPs, Frankenberg is positive about the adaptability shown by many startups during the past year. "The coronavirus crisis was mostly positive for startups and innovation," he told Unquote. "The startups had a lot of flexibility, so they could easily adapt. Some areas, such as digitialisation in the software space, even benefited, as did biotech and parts of the medtech space. Corporates are also recognising how important innovation is to cope with crisis situations."

The German Federal Ministry for Economic Affairs and Energy made a commitment of €130m to HTGF III, and the KfW also invested, according to Unquote Data. Both public bodies are also expected to commit to HTGF IV.

LPs in HTGF III include corporates such as Deutsche Post, as well as Evonik, Robert Bosch Venture Capital, and the pension fund of Wacker Chemie.

HTGF IV will continue the strategy of its predecessor funds, making seed and early-stage investments in digital technology, industrial technology, and chemistry and life sciences companies in Germany. 

HTGF III will have made 200 platform investments by the time of the first close of HTGF IV and will be fully deployed at that stage. HTGF III has 40% of its capital reserves for follow-on rounds, with a similar ratio expected for HTGF IV.

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