German startups raised more capital last year than ever before. They secured investments totaling €6.2 billion in 704 financing rounds, according to a recent study by the management consultancy EY. This represents a 13 percent increase in the number of deals and a whopping 36 percent increase in deal volume.
As in previous years, the most money flowed to Berlin, with €3.7 billion. Bavaria followed in second place with €1.5 billion. Bavaria and Berlin thus account for more than five-sixths of all startup investments. Berlin startups were able to increase their financing volume by 41 percent compared to the previous year, while Bavarian startups even grew by 93 percent. A few mega-deals accounted for a significant share of the record figures from the capital and Bavaria. Flixmobility With its financing round of over 500 million euros, it topped the ranking of all German investments last year, followed by the three Berlin-based companies Getyourguide (428 million euros), Frontier Car Group (estimated 361 million euros), and N26 (266 million euros). Just behind in fifth place for the largest financing rounds is the Munich-based unicorn Celonis with 261 million euros. Peter Lennartz, Partner at EY, says that Berlin will remain the most important German lighthouse internationally and adds:
"But Bavaria, with its center in Munich, has made significant progress in recent years due to its outstanding qualities in the high-tech sector and is establishing itself as the second, internationally recognized German startup location."
Fintech: “Consolidation due to oversupply of providers”
The record result was driven in particular by three sectors: Mobility startups nearly quadrupled their investments to €1.6 billion compared to the previous year and lead the industry rankings. Fintechs and insurtechs followed with a financing volume of €1.3 billion—almost double the volume compared to 2018. Software and analytics came in third with €1.2 billion. This sector also nearly doubled the capital raised. The big loser was the e-commerce industry. While the leader in 2018 with €1.7 billion in investments, this sector fell to fourth place with €730 million. Lennartz says:
"We are seeing increasing interest in highly innovative technology business models. SaaS, analytics, and AI are on the rise and are currently benefiting from high valuations. E-commerce may be taking a back seat, but it remains an important and strong segment. Fintech is likely to see consolidation in 2020 due to the oversupply of providers."
