Start-ups in Germany raised more money last year than ever before. According to a new study, young companies received the record sum of almost 17.4 billion euros in venture capital from investors – more than three times as much as in the corona crisis year 2020 (5.3 billion). The number of financing rounds rose sharply by 56 percent to 1160, as the consulting company EY announced on Thursday. Founders in Berlin collected by far the most money, followed by Bavaria. They were also ahead in the big deals. Most of the venture capital went to young firms in the finance, online trading, and software industries.
Start-ups with their mostly technology-based business models benefit from the fact that digitization has received a boost in the pandemic. Whether working from home, online shopping, streaming, food delivery or financial transactions – Corona is intensifying trends.
“The pandemic is increasingly proving to be a catalyst for a start-up financing boom,” says EY partner Thomas Prüver. More and more start-ups are getting fresh money and the sums are rising rapidly. The number of large deals with more than The volume of 100 million euros will quadruple in 2021. In addition, there is great investment pressure on the part of investors: “There is a lot of money in the market.”
However, the financial injections for founders were concentrated in a few locations. 10.5 billion euros in venture capital flowed into Berlin, giving the start-up stronghold alone a 60 percent market share. 4.4 billion euros (26 percent market share) went to Bavaria. Other federal states also posted large increases, but followed a long way behind – for example Baden-Württemberg (599 million euros), North Rhine-Westphalia (566 million) and Hamburg (459 million). Bavaria has established itself as a start-up location alongside Berlin, said Prüver. “For the other start-up locations, however, it is difficult to keep up.”
The largest transaction in Germany in 2021 was an injection of 861 million euros for the Berlin food delivery service Gorillas. This is followed by an investment of 830 million euros in the Munich software provider Celonis. It was followed by two other Berlin start-ups: the smartphone bank N26 (775 million euros) and the broker Trade Republic (747 million euros). In total, EY counted eight financing rounds with more than 500 million euros – in the previous year there was not a single one of this magnitude. The study took into account companies that are no longer than ten years old.
Start-ups depend on investors because they do not initially write profits. Funds and large companies invest capital in young companies in the hope that their business ideas will prevail. Start-ups are seen as drivers of innovation for the economy. However, the number of self-employed people in Germany has been falling for years. And when it comes to financing and IPOs for start-ups, Germany lags far behind countries like the USA and Great Britain.
In the past year, the corona pandemic slowed the upswing of many start-ups: donors held back, financing collapsed, and the business of young companies became more difficult. However, the great feared founder death did not materialize. (dpa)