divested volume was sold by means of an IPO, this fraction rose to more than 12.5% in 1998 and
1999. On average, the Neuer Markt covered about 75% of the IPOs backed by VC between 1998
and 2000.31 This fifth phase saw the peak of the remarkable development of the German VC
industry, not only in terms of volume but also in terms of the distribution among financing stages
and industrial sectors. Between 1996 and 2000, about € 10.8 billion in total were newly invested
in 6,300 companies, which is 68% of total new VC investments and 47% of all VC financed
companies over the last 30 years (BVK Yearbook 2001). This highlights the insignificance of the
German VC industry until the mid 1990s.32 With regard to the distribution among financing
stages, a strong movement towards early-stage financing can be discerned. While in 1996 only
about 14% of gross investments were in early-stage companies, this share reached about 36% in
2000. No other European country achieved this degree of growth. The corresponding volume
figure increased by a factor 18 between these two years. About one fifth of the early-stage
investments were refinanced through public programs implemented by KfW, Germany’s main
development bank.
While it had been criticized in the past that in Germany investments were mainly directed
towards old industries (see Leopold and Frommann, 1998), the investment patterns during the
boom phase became much more similar to those of the US, which reflects the importance of the
(new) high-tech sector. Computer, information technology, communications, and biotechnology,
which had received around 19% of new VC funds in 1996, accounted for more than 48% of gross
investments in 2000.33 However, this overall remarkable development came to an abrupt halt in
the second half of 2000 when the German VC market entered a period of consolidation, which is
still enduring.
31 The remaining 25% can be split equally into IPOs on other German stock exchanges and on foreign stock
exchanges such as the NASDAQ. For an in-depth study on venture-backed IPOs at Neuer Markt, see Franzke
(2001).
32 Whereas the volume of gross investments per deal has risen from € 0.94 million in 1996 to € 2.04 million per
company in 2000, these numbers seem to be small compared with those of the US ($ 19.1 million investments per
company in 2000).
33 However, the share of high-tech sectors in gross investments is even higher in the US, while in the UK it is
comparatively low running up to 24% in 2000 (EVCA yearbook 2001).
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