3.1 million euros — this is how a Bitkom study estimates the capital needs of German startups for the next two years. Only a quarter of those surveyed already have the necessary funds.
According to a Bitkom study, startups in Germany will need an average of €3.1 million in the next two years. In 2017, the capital requirement was €2.2 million, compared to €2.4 million in 2016. Only 9 percent require less than €100,000 in capital, and 12 percent need €5 million.
"Overall, the financing situation for startups, especially in the founding phase, has improved significantly in recent years. Financing remains difficult during the growth phase, when single- or even double-digit million-dollar amounts are required,"
says Bitkom President Achim Berg.
Munich startups are more frugal
Berg continues that such financing rounds are essential, especially for the international expansion of established German startups:
"In this area, we have so far lagged behind the US, Israel, and even China. However, a number of financing rounds in the high double-digit million range in recent months, especially among FinTechs, are a good sign."
Capital requirements vary significantly depending on the size of the startup. Small startups with one to three employees require an average of only around €400,000, while those with four to nine employees require €1.3 million, those with ten to 19 employees require €3.1 million, and those with 20 or more employees require an average of €10.3 million. Regional differences also exist. Startups in Munich need an average of €2.3 million, those in Hamburg need €4.1 million, and those in Berlin need €4.5 million.
More startups suffer from a lack of capital
One in four startups has already covered its capital needs for the coming years. However, 40 percent of the remaining companies consider it very likely they will receive financing, and 39 percent consider it somewhat likely. 15 percent consider it somewhat unlikely that they will raise the capital, and 5 percent even consider it very unlikely. In total, one in five startups surveyed could fail due to a lack of financing. Last year, this figure was 14 percent. Achim Berg says:
"If the proportion of startups that fear they won't be able to secure the financing they need is increasing, that's something to think about. Politicians have set themselves some ambitious goals for the current legislative period to mobilize more venture capital for the German startup scene—we must now move quickly forward with their implementation."
Approval of politics
The measures proposed by politicians are well received by the startups surveyed: 74 percent find tax incentives to mobilize private venture capital helpful. Two-thirds say they would benefit from a capital fund that supports startups with low-interest loans. Likewise, two-thirds welcome the announced national digital fund, which, together with industry, aims to attract more institutional investors for startup investments.
