Rising interest rates, falling valuations and cautious investors – the framework conditions for Startups were not exactly rosy in 2022. In numbers, German start-ups raised 9.9 billion euros last year – 43 percent less than in 2021. The number of deals was also lower last year than in 2021, falling from 1,160 to 1,008. Nevertheless, the 1,000 deal mark within a year was exceeded for the second time in a row.
In particular, the number of large deals exceeding €50 million has declined sharply, from 72 investments (33 of which were over €100 million) to just 37 (19 of which were over €100 million). In contrast, deals in the €5 million to €50 million range increased, from 228 to 246. Thomas Prüver, Partner at EY, says:
"With deals totaling almost €10 billion, 2022 represents the second-most successful year ever for the startup industry in Germany. And this in a time characterized by geopolitical challenges, high inflationary pressure, and rising interest rates. Investments will continue – albeit at a lower level and under different conditions. What has changed is the framework: In the face of rising capital costs and declining valuations, investors are paying more attention to profitability than to long-term growth prospects. Young companies are required to adapt to this and demonstrate a clear path to profitability."
Every seventh euro goes to sustainable startups
At €3.2 billion, the Software & Analytics sector saw the most investment compared to the industry. €1.4 billion went to mobility startups, €1.3 billion went to fintechs and insurtechs, and €1.1 billion went to energy companies.
Across the industry spectrum, the study authors also examined investments in startups with a sustainability focus, which secured a total of €1.5 billion—more than one in seven. Sustainable startups in the energy and agtech sectors accounted for the highest share of financing rounds, at 72 percent, and 57 percent, respectively.
