Founder scene - Start-ups get more money from investors again
Start-ups in Germany have received slightly more money from investors in the first half of the year after the financing crisis of the past years. Around 3.4 billion Euros in venture capital were invested, which is 12% more than the previous year (approximately 3.1 Mrd Euro). According to a study by the economic auditing and consulting firm EY, which was obtained by the German Press Agency, the authors speak of "signs of a turning point" - investments in start-ups had significantly decreased in the first two half-years of 2022 and 2023. Berlin remains undisputed as a hotspot for founders this year, but North Rhine-Westphalia is catching up.
Struggling Young Start-ups
Despite the uptrend, the financing situation has not improved for all start-ups. The number of financing rounds continued to decline to 367 deals, which is almost half the number within a year. "There is still no sign of a general relaxation in the German startup scene," said EY Partner Thomas Prufer. While there were more medium-sized and large financing rounds over 100 million Euros, the number of small deals under ten million Euros had dropped. It is "alarming that it seems to be getting harder and harder for very young start-ups to get fresh capital." In the early stages, injections of capital are essential.
Recovery after Difficult Times
Start-ups rely on investors for their growth. Large funds and corporations invest in young companies in the hope that their ideas will prevail. In the Corona pandemic, start-ups experienced a boom. They benefited from the fact that interest rates were low and digitalization received a push - for example, in financial transactions, online shopping, or food delivery. In the boom year 2021, almost 7.6 billion Euros were invested in start-ups in the first few months alone.
However, with the interest rate hike came the crisis: Many start-ups cut jobs, others were taken over. According to EY, venture capital investments fell by 39% in 2023. At least the worst seems to be over.
Berlin still leading - but NRW is looking at large rounds
Among the federal states, Berlin remained at the top in the first half of the year but had to give way. Investments in start-ups there decreased by a quarter to approximately 1.1 billion Euros. A reason: In the area of online trade, where Berlin traditionally excels, significantly less money was invested. Start-ups from Nordrhein-Westfalen moved closer, according to EY, receiving 822 million Euros in the first six months - 653 million more than in the previous fiscal year. Behind this are large financing rounds, in particular the online translation service DeepL (277 million Euros) and the semiconductor company Black Semiconductor (254 Mio). In third place were start-ups from Bavaria with 577 million Euros, a decrease of around one third.
The Startup Association called on politics to continue supporting the founder scene. "This requires easing immigration of skilled workers, mobilizing private institutional capital for venture capital, and creating more attractive exit channels," said Managing Director Franziska Teubert.
- Despite the increase in venture capital investments in Germany, some start-ups in the 'founder scene' are still struggling to secure financing, with a noticeable decrease in the number of small deals under ten million Euros.
- Companies based in North Rhine-Westphalia have seen a significant boost in investments, with large financing rounds contributing to a total of 822 million Euros in the first half of the year, placing them second only to Berlin.
- The German Press Agency reported findings from a study by economic auditing and consulting firm EY, indicating a potential 'turning point' in start-up financing after a decline in the first two half-years of 2022 and 2023.
- The founder scene in Germany continues to rely heavily on partnerships with investors, as demonstrated by large funds and corporations pouring money into promising young companies like the online translation service DeepL in North Rhine-Westphalia.
