Berlin led the boom in start-up investment in Germany last year, with young companies raising a record €6.2bn (£5.3bn, $6.9bn) in fresh capital, a 36% increase from the year before, according to a start-up study from EY Germany.
“German start-ups have never received so much money as they did last year; the financing boom continues unabated,” said Hubert Barth, CEO of EY Germany. "Once again, a number of very large deals, primarily from foreign investors, made for record investment."
EY found that mobility and travel startups were the winners when it came to funding in 2019, attracting a total of €1.6bn. Munich’s FlixMobility and Berlin-based unicorn GetYourGuide grabbed the lion’s share, with mega-rounds of €500m and €428m respectively. Funding for e-commerce startups, however, totalled just €730m.
"Last year, top start-ups had hardly any problems getting fresh capital, the number of German unicorns continued to increase in 2019," said EY partner Peter Lennartz.
Berlin is the clear leader when it comes to attracting capital in Germany. Its young companies received €3.7bn last year, 40% more than in 2018. However, Bavaria is closing the gap, with a 93% increase in investment from 2018, to €1.55bn in total.
Lennartz notes that there was a significant increase in small, early-stage investment rounds with a volume of up to €5m, but a decrease in medium-sized investments in the €10m to €50m range.
“Financially strong and predominantly international investors from the USA, Great Britain, and Asia are particularly interested in very large transactions, also because valuations in Europe are still relatively cheap compared to Silicon Valley,” Lennartz said.
The German government is currently discussing a “Future Fund” aimed at boosting the country as a start-up hub, which Lennartz says will help significantly: “France has gone ahead and shown the dynamics that can be sparked when the state is more active and mobilises broad support for innovative and digital start-up scene.”
French president Emmanuel Macron is on a mission to turn France into what he calls a “unicorn nation,” launching a range of initiatives, including a €400m fund to co-invest in Deeptech start-ups, and introducing a more flexible tech visa to make it easier for non-EU citizens to set up shop in France.