AI boom gives startup scene new momentum
The entrepreneurial spirit in Germany is strong and has received a new boost thanks to Artificial Intelligence (AI). This is reflected in the new startups in the software sector. Two federal states in particular stand out.
Despite strong setbacks, more startups were founded in Germany in the first half of 2024. According to an analysis by the Startup Association, 1,384 new startups were created in this period. This was 15% more than in the second half of 2023 and approximately 7% more than in the previous year. "The significant increase in new startups shows that the entrepreneurial spirit in Germany is strong," said Helmut Schönenberger, deputy chairman of the Startup Association. After the setback in mid-2022, a positive trend is now emerging.
The software sector in particular is driving the industry, according to the study, which was conducted by the analysis firm Startupdetector using commercial register data. With 302 new startups, there was an increase of 35%, meaning that every fifth new startup was in the software industry - a record. This reflects the increasing digitalization and the use of AI in the business world, according to the Startup Association. In particular, the chatbot ChatGPT has caused a hype around AI. Overall, the number of new startups increased in almost all sectors, with online retail seeing a 36% increase, while there was a stagnation in the food and medical sectors.
Startups benefited from the digitalization push and low interest rates during the Corona pandemic. Logistics services and financial brokers, for example, experienced a boom. However, with rising interest rates, economic concerns, and the Ukraine war, investors became more cautious. Many start-ups struggled to get funding and had to cut jobs.
According to the study, Berlin, Bavaria, and North Rhine-Westphalia were among the regions with the most new startups. In particular, there was a significant increase in North Rhine-Westphalia (plus 25%) and Berlin (plus 28%). Berlin and Munich remain the startup hotspots in the country, accounting for more than a quarter of all new startup foundations in the country (26%).
Not only the large startup metropolises, but also many smaller cities and regions saw an increase in new startups, it says. With Aachen, Darmstadt, and Heidelberg, three research-oriented cities are among the strongest startup cities per capita. The increasing importance of regions shows "the potential that lies dormant in Germany's depths," said Felix Engelmann, co-founder of Startupdetector.
The boost in Artificial Intelligence (AI) in Germany has led to an increase in start-ups focusing on AI applications. Among these new ventures, a significant number are in the software sector, leveraging AI for innovation.
As a result of the rising popularity and utilization of AI, particularly with the chatbot ChatGPT, numerous AI-driven start-ups have emerged, contributing to the growth in the software sector.
