Venture Capital Investor Sentiment in Germany Remains Low

According to the latest VC Barometer, sentiment among German venture capital investors remained subdued in the first quarter of 2026. The confidence indicator rose by 6.2 points to -25.9 points, still well below the long-term average. The slight improvement was primarily driven by a more positive assessment of the current situation, while investors' six-month business expectations remained unchanged.

The findings, compiled by KfW Research and the German Private Equity and Venture Capital Association (BVK), highlight a significantly more negative view of the interest rate environment among investors compared to a few months prior. Expectations now point towards potential interest rate hikes by the European Central Bank. This shift is anticipated to complicate fundraising for VC funds and put downward pressure on startup valuations, making exits even more challenging.

Despite the cautious outlook, the first quarter saw a stable deal flow with EUR 1.7 billion invested. Dirk Schumacher, Chief Economist at KfW, noted this stability, while Ulrike Hinrichs, an executive board member at BVK, expressed optimism for the year, citing global trends in artificial intelligence, robotics, and defense that could positively impact the German market.

Investors reported a positive deal flow but noted a decline in entry valuations, indicating dissatisfaction with the cost of new investments. While sentiment around fundraising improved, the exit climate remains a significant concern, with investors expressing strong dissatisfaction with their options for divesting investments.