Analysis: Why atares chose Munich as its strategic headquarters and what this means for the German Mittelstand.

With the Bavarian VC Resolution 2025, the framework for venture capital in Germany has fundamentally shifted. Charitable foundations are now allowed to invest up to five percent of their assets into VC funds — a regulatory change that could channel hundreds of millions of euros of additional capital into Germany’s ecosystem.

For atares, the advisory firm specializing in technology‑driven M&A transactions, this development was not a surprise but a confirmation of a strategic thesis: Munich and Bavaria are a centre of German tech companies.

Strategic choice of location

The decision to found atares in Munich was not accidental but the outcome of a systematic analysis of ecosystem factors:

• Capital density: The highest concentration in Germany of family offices, private equity, growth capital and venture funds.

• Startup maturity: The stage of the local startup ecosystem allows transactions across multiple growth phases.

• Industrial base: A large number of tech and IT companies creates a fertile ecosystem for future technology innovation.

• Talent pool: Top universities, initiatives such as the CDTM, and the presence of many research institutes attract STEM talent from around the world.

Already in 2001, the year atares was founded, Munich was Germany’s VC El Dorado. Although other German metropolises have caught up, atares remains excited about Munich’s technological innovation strength.

The five pillars of Bavarian innovation finance

The Bavarian ecosystem is supported by several institutionalised programmes:

1. High‑Tech Gründerfonds (HTGF)

With over one billion euros under management, HTGF remains the central financing instrument for tech startups in seed and Series A phases, and in future for growth financing. For M&A strategies relevant: HTGF‑financed companies form a qualified pipeline for later acquisitions.

2. Bayern Kapital

The state’s investment company focuses on growth capital and prepares scale‑ups for international expansion – a necessary precondition for M&A readiness.

3. Bavarian VC Resolution 2025

The liberalisation of foundation asset investment opens a new financing channel. Estimates range from €300–500 million in additional annual capital flow.

4. KfW Innovation Loans

Specialized credit programmes enable scale‑ups to conduct M&A transactions using debt financing without jeopardising their equity ratio.

5. Digital Innovation Hubs (DIH) Bavaria

The DIHs serve as a quality assurance mechanism for acquisition targets – established SMEs with high integration potential.

Germany’s M&A deficit

Despite this infrastructure a persistent discrepancy exists between available capital and M&A activity. On the 25th‑anniversary event of the VC magazine in Munich, Florian Nöll, Partner & Head of Corporate Development, M&A and Innovation at PwC, summed it up.

This reluctance – often rooted in risk aversion, lack of M&A expertise or cultural factors – has cost German companies growth potential compared to Anglo‑American and Asian competitors over recent decades.

The trend reversal is however emerging. Current market analyses forecast a 20 percent increase in German mid‑market transactions by 2026. This is not organic growth – this is an M&A acceleration.

Practical implications

For scale‑ups and midsize companies in tech and IT sectors a strategic window is opening: The combination of increased capital availability (VC Resolution), established financing instruments (HTGF, Bayern Kapital) and rising transaction volumes create ideal conditions for buy‑and‑build strategies.

Conclusion: Munich as Catalyst

The Bavarian VC Resolution 2025 is less an isolated regulatory experiment and more the formalisation of a long‑term strategy: Bavaria is positioning itself as Germany’s leading M&A hub. Securing competitiveness via innovation and M&A is one of the most important future strategies for our country. That’s what we are passionate about.