The ruling factions of SPD and the Green party have proposed founding a “Hamburg Innovation Growth Fund” to give financial backing to young companies and help them grow. Existing support programmes have so far only given backing in the course of founding the companies, said a government statement. Now SPD and Greens seek to extend support beyond the growth phase. Private investors would participate in the “Hamburg Innovation Growth Fund”, which is also supported by the City of Hamburg, and aims to seal the supply gap in financial instruments.
Investing in the start-up scene
Hansjörg Schmidt, spokesman for the economic policy of the SPD faction, said: “In terms of financiers, we are thinking along the lines of 'old money for new ideas’ especially Hamburg’s many financial investors, who have so far used mainly traditional forms of investment and who do not yet have access to the quirky start-up scene.” He added: “Instead of investing in empty office buildings, it would make more sense to put this money towards all the clever, young entrepreneurs in the Schanze district. The growth fund could become the starting point for promising investments that benefit the entire city.”
Up to EUR100 million for the growth funds
The volume of the fund would be EUR 100 million in equity capital, guarantees or loans for innovative companies with new products, procedures and services and who seek to grow after the start-up phase.
Private investors could participate in the fund with a share of up to EUR 90 million (minimum share: EUR 2 million; maximum share: EUR 10 million). The city’s own share would be mainly through the IFB and coupled with credit committee guarantees i.e. the Bürgschaftsgemeinschaft Hamburg. The inclusion of federal and EU financial means has yet to be examined.
Backlog in promoting growth
Joachim Seeler, spokesman for the financial sector, industry and trade in the SPD faction, said: “By international comparison, Hamburg, and Germany in general, needs to catch up in terms of promoting the growth of existing young companies. This is precisely the point at which we are now starting. With this new, innovation growth fund, we are creating an important and flexible instrument to help young companies develop their business in a targeted manner.”
When products, procedures or services have achieved a certain market maturity, the next step concentrates on market penetration, setting up production, marketing and sales. That phase decides whether the company can survive on the market in the long term. Seeler added: “Thus, backing at this point is particularly important.”
Location of Hamburg to profit
Establishing this new fund would strengthen Hamburg’s innovative strength sustainedly. Anjes Tjarks, chairman and spokesman for economic policy in the Green Party faction, said: “It is a central component towards offering effective support to the innovative, knowledge-based sectors with high, added value in Hamburg’s economy.” He added: “The aim of our initiative is to offer support to innovative companies in the important transition phase from start-up to successful firm and to enhance the existing instruments. By doing so, we will be further developing Hamburg as a location for knowledge-based industries.”
Sources and further information:
SPD-Bürgerschaftsfraktion SPD Faction of the Hamburg State Parliament