By Nadine Schimroszik and Supantha Mukherjee

BERLIN (Reuters) -SAP said on Thursday demand for its cloud business database was growing as the German business software group confirmed its preliminary third-quarter results and full-year guidance boosted by big returns from its ties to a venture capital firm.

Last week, the company had forecast cloud revenue to grow by 16%-19% in the year as a whole, helping its overall cloud and software revenue to increase by 2%-4%.

Cloud backlog for flagship database S/4HANA was up 58% at constant currencies and current cloud backlog – a measure of incoming business – grew 22% in the third quarter.

“Our cloud revenue now represents 35% of our total revenue and that’s driving up our share of more predictable revenue, which rose by 3 percentage points year over year to 77%,” Chief Financial Officer Luka Mucic said on a call with journalists.

Shares of the software maker, however, fell 3.4% to the bottom of Frankfurt’s blue-chip index after traders pointed to Mucic confirming the group’s forecast for flat or slightly lower 2022 profits in a separate call with analysts.

“If the market was thinking this was going to be the EU tech play for 2022, they may now have other ideas,” a trader said.

SAP still raised its forecast for cloud and software revenue for the full year by 200 million euros ($232 million) to 23.8 billion-24.2 billion euros.

Adjusted revenue rose 5% to 6.68 billion euros ($7.70 billion) for the third quarter ended Sept. 30, and adjusted earnings per share rose 2% to 1.74 euros.

Quarterly results were also lifted by the company’s venture capital arm, Sapphire Ventures, which accounted for a quarter of SAP’s more than 2 billion-euro profit in the third quarter, underscoring the fund’s recent success in backing small tech startups.

The VC firm, spun out of SAP in 2011, has backed high-profile startups such as Square, Box, Fitbit and Wise.

Some analysts say they do not take into account in their forecasts the fund’s performance, preferring to focus on the more predictable results of its cloud offering.

But year-to-date the business has contributed about 1.8 billion euros to earnings, up by 1 billion year-on-year, Mucic said on the call with journalists.

“Our typical check size is $10 to $60 million, but we can go all the way up to $100 million,” Andreas Weiskam, co-founder and partner of Sapphire Ventures, said in an interview with Reuters.

Weiskam said the fund’s assets under management currently stands at more than $6.8 billion. SAP had committed $1.75 billion last quarter.

“Sapphire Ventures gives SAP tail wind. But it also means volatility – depending on the capital markets,” said Knut Woller at brokerage Baader Helvea.

($1 = 0.8581 euro)

(Reporting by Nadine Schimroszik and Riham Alkousaa in Berlin and Supantha Mukherjee in StockholmAdditional reporting by Danilo Masoni in London and Christoph Steitz in Frankfurt; Editing by Josephine Mason, David Evans and Matthew Lewis)