Germany is in its third consecutive year of recession. For the first time in ten years, the number of unemployed has exceeded three million. At the same time, reforms to reduce bureaucracy and promote digitalization are progressing only slowly. Verena Pausder, Chairwoman of the Startup Association, therefore calls for a consistent innovation policy:
"Germany can no longer afford political inertia. We must focus everything on innovation instead of blocking ourselves with political trench warfare. Only in this way will our country once again become Europe's engine of innovation and growth."
Start-up dynamics despite the crisis
The good news: In the first half of 2025, 1,500 new startups were founded in Germany – an increase of 9 percent compared to the previous half year. This was primarily in software and industrial solutions, fueled by AI. At the same time, however, insolvencies are rising, especially in the B2C segment. Pausder emphasizes:
"In Germany, things are happening in terms of future technologies. But many startups and scaleups are under massive pressure. Now we need a startup strategy that brings new momentum: Startups must finally be a top priority."
Government without clear responsibilities
The Startup Association criticizes the federal government's lack of accountability in innovation policy and the power struggles between ministries that are hindering progress. "Reliability and speed" are demanded.
The association also warns that the Collective Bargaining Agreement Act effectively excludes young companies from government contracts because they are unlikely to be able to meet the stipulated requirements.
The Economic Development Act also received only limited approval. While it could strengthen Germany's position as a financial center, it remains inadequate without adjustments to reinvestment, capital market liberalization, and employee participation.
According to the Startup Association, the Fund Risk Limitation Act is particularly problematic. The planned change in valuation rules would place a disproportionate burden on smaller funds and jeopardize their continued existence.
Mobilize capital
In the first half of 2025, €4 billion in venture capital flowed into Germany, €1.7 billion of which went into AI startups. Around a third came from the US, while Europe offers weak exit markets.
The WIN initiative's original promise to mobilize 12 billion euros for startups by 2030 must now be implemented with transparency and speed, it is said.
A European capital markets union, the opening of institutional sources in Germany, more attractive exit channels, and rapid reforms are essential for the startup scene to survive internationally.
