Good news from the German startup ecosystem: Money is flowing again. The total value of venture capital investments in startups in the first six months of 2024 was €3.4 billion. That’s €363 million or twelve percent more compared to the same period the previous year. A sign of a turnaround after investments in startups had fallen significantly in the first half of 2022 and 2023. This is shown by the Startup Barometer from EY. The study is based on an analysis of investments in German startups. EY generally classifies startups as companies no older than ten years.
But despite all the good news, there’s also a dampener: Financing rounds in the first half of 2024 fell significantly again. Compared to the same period the previous year, they dropped by 87 deals to 367 transactions – a decline of 19 percent. The decrease in small financing rounds is particularly noticeable. The number of deals valued at less than five million euros fell by 33 percent to 200. Transactions in the five to ten million euro range also decreased from 45 to 41. Germany’s startup sector only saw growth in large deals. Investments between 50 and 100 million euros numbered six in the first half of 2023 and nine in the first half of 2024. EY puts deals over 100 million euros at five for the first half of 2023 and seven in the first half of 2024.
Thomas Prüver, Partner at EY, comments:
“Despite the positive development in financing volumes, there’s no reason for general relief in the German startup scene yet. On the positive side, the number of medium-sized and large deals remained nearly constant or even increased slightly. However, the sharp drop in the number of small deals under ten million euros is a development that must be viewed with concern. It’s quite alarming that it’s becoming increasingly difficult for very young startups to access fresh capital.”
Berlin’s market share declines
Berlin remained the investment hotspot in the first half of 2024, attracting the most capital at €1.1 billion. However, its market share fell from 47 to just 31 percent. Startups from North Rhine-Westphalia, meanwhile, jumped to second place. According to EY, they received €822 million in the first six months of 2024. That’s a significant €653 million more than in the same period the previous year. Their market share thus increased from six to 24 percent. Bavarian startups rank third, recording a capital inflow of €577 million (down 33 percent).
EY identifies investment boost for software startups
While e-commerce companies collected €395 million in the first half of 2023, they raised only €233 million in 2024 so far (down 41 percent). According to EY’s projections, startups in the software and analytics sector have by far received the most investment capital. €1.1 billion, which is €334 million more (up 45 percent) than in the same period the previous year.
The capital increase in the hardware sector was even more pronounced, with a total of €435 million in investment capital flowing in (up 257 percent). Energy startups, by contrast, lost ground at third place: €349 million – €328 million less than in the same period the previous year (down 48 percent).
The complete study is available for free download on the EY website.
