Venture Capital: Kfw Capital Introduces “Emerging Manager Facility” To Back Small And Gender-Diverse VC Funds

The ‘Emerging Manager Facility’ will be allocated EUR 200 million from the German Government’s Future Fund.

Germany’s state-backed LP KfW Capital has introduced the ‘Emerging Manager Facility’ (EMF) to enhance diversity within the country’s VC ecosystem, an issue pervasive throughout Europe. The EMF is designed to invest in smaller VC funds with €50 million in assets under management, many of which are newly entering the VC market, and are managed by women or gender-diverse teams. These chosen VC funds can receive a maximum of €12.5 million or up to 25% of the fund’s total size.

The EMF is part of the federal government’s €10 billion Future Fund, initiated in December 2020 to address late-stage funding gaps in Germany. The Future Fund will invest €200 million in the EMF by 2030. KfW is already in talks with emerging managers about their participation in the program.

To qualify for the EMF, teams must meet certain criteria related to diversity, such as having at least one-third female and/or non-binary members in the management team or 40% in the senior investment team or investment committee. The EMF is open to funds headquartered in Germany or Europe and covers various industries, with the stipulation that funds must reinvest the same amount they receive into German startups.

Diversity at the VC partner level is a widespread challenge across European ecosystems. The EMF has generated anticipation among emerging managers, as it provides an opportunity to break into established fund systems. However, some stakeholders are cautious, citing the need for closer monitoring of the fund’s deployment and outcomes.

The EMF not only aims to enhance diversity but also seeks to funnel more capital into emerging funds, which often outperform established ones. By supporting diverse VC teams, the hope is to boost investment in diverse founders.

Related Story:  NYCEDC Launches Venture Access Alliance To Boost Diversity In New York Tech

Photo by Bermix Studio on Unsplash

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