German startups raised six billion euros last year. This is 39 percent less than in 2022, when €9.9 billion flowed into startups. Compared to the €17.4 billion investment in the record year of 2021, the decline is as much as 65 percent. The number of financing rounds also decreased in 2023: 861 deals represent 15 percent fewer deals than in 2022 (1,008).
The low total amount is also explained by the reduced number of large deals of more than €100 million. While there were 19 mega-investments in 2022, the number fell to eight in 2023. In 2021, there were even 33 investments above the €100 million mark. These are the results of the current Startup Barometer of the consulting firm EYTheir study is based on an analysis of investments in German startups.
EY Partner Thomas Prüver explains:
"Investors continue to act with caution and invest their money selectively. The environment is characterized by inflation, high interest rates, the difficult global geopolitical situation, and weak economic development. Good ideas alone are no longer enough for young companies to access fresh capital, even in these challenging times. Solid and well-thought-out business models combined with realistic sales forecasts and the prospect of profitability are currently the be-all and end-all in the eyes of investors."
Berlin loses market share
A look at the individual federal states reveals that Berlin suffered the greatest losses. According to the study, Berlin-based startups received the most capital in 2023, but at almost €2.4 billion, it was less than half as much as a year ago. Berlin's market share thus fell from 50 to just 39 percent. Bavarian startups received just over €1.7 billion. While this is a good €600 million less than the previous year, their market share nevertheless increased from 24 percent in 2022 to the current 29 percent. Startups in Baden-Württemberg were the only one of the top three federal states to receive more venture capital in 2023 than in the previous year. With investments of €736 million, this represents a market share of twelve percent for 2023 (2022: seven percent).
Record investments in AI startups
But there are significant differences not only at a regional level. Energy startups, for example, remained only slightly below the previous year's level with revenues of €998 million. The e-commerce sector remained similarly stable, with €633 million invested last year, just €2 million less than in 2022.
Due to the hot topic of artificial intelligence, the largest investment volume was in software startups. Just over two billion euros flowed into this sector last year – 1.2 billion euros, or 38 percent less than in 2022. While the investment volume in the software-as-a-service subsector almost halved, declining from 1.9 billion euros to 918 million euros, the artificial intelligence subsector saw a strong upswing, rising from 220 million euros to 943 million euros.
The startup ecosystem in this country is in the process of reorganizing itself and could emerge stronger from the current crisis, examiner:
"Besides Berlin, other startup regions are gaining importance and are also becoming increasingly visible internationally. Furthermore, the technology sector is developing into a key growth driver – Germany is well positioned here. Excessive growth from the boom years is now behind us, and investors and founders have become more cautious and realistic. There are some indications that the bottom has now been reached in startup financing and that things will pick up again in the foreseeable future."
