Bavaria overtakes Berlin: start-ups collect record venture capital!

Bavaria overtakes Berlin: start-ups collect record venture capital!

In the dynamic field of start-ups, an exciting competition is emerging between Bavaria and Berlin. Loud Radioguetersloh Bavarian start-ups acquired an impressive 2.1 billion euros in venture capital in the first half of 2023, significantly overtaking their Berlin competition with 1.5 billion euros. This shift is a sign of the growing importance of the Bavarian economic landscape, with almost half of all venture capital in Germany flowing to Bavaria.

The numbers are impressive: Overall, the volume of venture capital for German start-ups increases to 4.6 billion euros, which corresponds to an increase of a third compared to the previous year. Particularly noteworthy are the largest financing rounds in Bavaria, such as those of the AI ​​company Helsing with 600 million euros and the battery storage provider Green Flexibility with 400 million euros. The investors have a good knack for promising areas such as the defense industry, artificial intelligence and energy technologies.

Bavaria's recovery vs. Berlin's dominance

While Bavaria shines in terms of financing amounts, Berlin remains at the top in terms of the number of deals with 132 financing rounds - more than twice as many as in Bavaria, where 76 financing rounds were recorded. This shows that Berlin is still an important start-up capital, even if it is falling behind in the area of ​​large-scale financing. The online retail industry, once Berlin's strength, is seeing a decline in investment, while Bavarian start-ups are experiencing a real boom.

EY’s analysis gets to the point: “Bavaria has shifted the balance in the German start-up ecosystem.” Bavarian start-ups were able to increase their finances even further in 2024 by raising 2.33 billion euros in venture capital. In comparison, Berlin start-ups only raised 2.17 billion euros, which means a decrease of 200 million euros. This is a clear trend reversal!

Investment climate is recovering

Like that KfW reports, the investment climate in the German start-up environment remains positive. The latest quarterly figures show that a total of 2.4 billion euros flowed into German start-ups in the second quarter of 2023, which means an increase of 45 percent compared to the first quarter. This recovery follows a period of uncertainty caused by rising interest rates.

It can also be noted that German start-ups already carried out 735 financing rounds in the first six months of 2023, signaling an increase in activity in the industry. The new financing rounds also include two start-ups that became unicorns in May 2023 - a valuation of over 1 billion US dollars is a real success for the German start-up ecosystem.

Even if the future looks promising, dependence on foreign investors remains an issue. Around 30 percent of the funds come from the USA, which makes the German market vulnerable to external fluctuations. In order to close the financing gap of 30 billion euros annually, venture capital should increase to one percent of economic output by 2030.

In a nutshell: The start-up scene in Bavaria is gaining in importance and is overtaking Berlin in terms of financing amounts, while the dynamic start-up landscape is experiencing a recovery overall. This is a positive sign for the future of innovative entrepreneurship in Germany.