Germany consolidates deep-tech finance, to the benefit of fusion

1 December 2025

Germany’s decision to merge the DeepTech & Climate Fonds (DTCF) into the High-Tech Gründerfonds (HTGF) represents one of the most substantial restructurings of Germany’s public-private VC architecture since the founding of HTGF in 2005. Beginning 1 February 2026, the unified platform will consolidate seed, early-stage, and growth financing under a single institutional umbrella – a move designed to reduce fragmentation in the country’s deep-technology funding landscape and strengthen capital pathways for science-driven companies, particularly those pursuing fusion energy.

HTGF is already one of Europe’s most active early-stage investors with more than 800 portfolio companies and over €8bn in mobilized private capital since 2005. It will absorb DTCF’s 19-company portfolio and the planned €1bn in investment commitments from the German Future Fund and the ERP Special Fund. It appears the combined platform will manage more than €2bn across multiple vehicles, with HTGF planning to launch its fifth flagship seed fund, HTGF V, in 2027. For policymakers, the merger represents more than administrative streamlining. As HTGF Managing Director Dr. Achim Plum explained, the unified structure is intended to provide high-growth companies with a coherent financing path “from technological development through market leadership.” DTCF Managing Director Dr. Elisabeth Schrey noted that the fund’s coordinated syndicates had already enabled unusually long development timelines for deep-technology ventures—an attribute increasingly essential for capital-intensive sectors such as fusion energy.

Implications for Germany’s Private Fusion Sector

The consolidation carries immediate consequences for Germany’s rapidly expanding fusion ecosystem. Both HTGF and DTCF – as well as Bavarian Government fund, Bayern Kapital – were investors in Proxima Fusion’s €130m Series A (later extended to approximately €200m), the largest private fusion financing round in European history. This investment demonstrates that German fusion companies can attract substantial capital, yet Germany’s three primary private fusion companies – Proxima Fusion, Marvel Fusion, and Focused Energy – have repeatedly highlighted the structural deficiencies of the current financing environment. In September 2025, they jointly requested at least €3bn in public support through 2029, warning that fragmented funding streams threatened Germany’s ability to translate its world-class plasma physics research base into industrial leadership. The unified HTGF–DTCF platform responds to this, at least in part, by creating a single interface for growth-oriented capital deployment intended to reduce the inefficiencies that arise when companies must navigate multiple funding vehicles with different investment criteria and timelines.

However, the merged fund’s sector-agnostic mandate also raises questions for the fusion community. Unlike countries that have established dedicated fusion programs, Germany is positioning fusion within a broader investment landscape on the same level as quantum technologies, semiconductors, industrial transformation, artificial intelligence, biotechnology, and advanced materials. The challenge will be ensuring fusion receives proportional attention despite its outsized capital requirements and multi-decade development trajectory. As Dr. Janina Jänsch of the Federal Ministry for Economic Affairs and Energy emphasized, the consolidation aims to strengthen innovation-driven prosperity across the economy. It remain t be seen how the merged fund intends to structure co-investments, allocate risk, and define fusion-specific metrics within its broader portfolio strategy.

Federal Research Funding & the Dual-Track Strategy

The merger abuts Germany’s Fusion 2040 programme, the country’s primary federal initiative to accelerate the development of fusion energy, with the aim of enabling a German fusion power plant around 2040. That programme seeks to establish a comprehensive “fusion ecosystem,” a collaborative network in which public research institutes – such as the Max Planck Institute for Plasma Physics, the Karlsruhe Institute of Technology, and the Research Center of Jülich – cooperate directly with private industry and startups, accelerating the transfer of scientific advances into practical, industrial applications. To support this ambition, the German government has committed approximately €2.5bn to fusion development through 2029, and indicated further increases in funding in the early 2030s, as fusion moves closer to a deployment phase. The committed €2.5bn includes over €1bn for research, additional funding for infrastructure modernisation, and €370m dedicated to Fusion 2040’s public-private collaborative projects over the next three years.

What emerges is a dual-track strategy: the Fusion 2040 programme provides public institutional funding for scientific and pre-commercial research, while the HTGF–DTCF platform supplies venture and growth-stage capital for private fusion companies. In principle, the model offers comprehensive coverage from basic research to commercialization.  The merger of the HTGF-DTCF platforms might aid in catalysing further equity financing and coordinating non-dilutive public financing for portfolio companies, including Proxima Fusion.  In practice, the disconnect between Germany’s research excellence and its historically conservative risk capital markets poses questions: can merged public venture funds scale to meet fusion’s multibillion-euro needs, or will German companies continue to rely on foreign capital?

Germany’s Middle Path

Germany’s model sits between highly targeted public investment strategies and market-leveraged frameworks abroad. The United Kingdom pursues a more centralized and programmatic approach, with initiatives such as “Fusion Futures” committing up to £200m for research and infrastructure, while the “Fusion Industry Programme” allocates up to £35m directly to companies developing commercial technologies. Unlike Germany’s sector-agnostic funding environment, the UK explicitly prioritizes fusion as a national industrial mission with dedicated funding channels.

The United States approach blends federal validation with private-sector discipline. The “Milestone-Based Fusion Development Program” awarded $46m to eight companies, including Focused Energy, on the condition that private capital covers more than half of total expenditures. Rather than acting as a VC investor, the US Department of Energy serves as a catalytic grant maker, using technical milestones to unlock private-market momentum. This creates stronger leverage ratios but offers less long-term stability than Germany’s public venture model.

Germany’s merger of DTCF and HTGF reflects a strategic choice to build an integrated, economy-wide deep-tech investment platform rather than a dedicated fusion vehicle. Compared with the UK’s mission-driven fusion programs, Germany’s model is broader but less explicitly aligned with fusion commercialization. Relative to the US, Germany provides more direct venture support but lacks the scale and market-driven catalytic effects of milestone-based grants.  Ultimately, the unified fund may strengthen Germany’s position if governance structures are designed to accommodate fusion’s unique financing profile. Whether this consolidation becomes a foundation for global competitiveness or not will depend on how effectively Germany aligns its new investment platform with its scientific ambitions and its national champions in the rapidly accelerating international race toward commercial fusion energy.