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A total of €1.1 billion was invested in startups from Munich and the surrounding area last year, €300 million less than in 2019. The number of investments also decreased: While there were 143 closings in 2019, only 111 financing rounds were completed in 2020. However, the average investment volume remained stable: In 2019 and 2020, startups received an average of €9.8 million per financing round.
While the Munich startup ecosystem had to cope with a noticeable decline in funding last year, a comparison with 2018 shows that the coronavirus crisis could not undo the strong growth to date: Back then, only €495 million was raised in 156 rounds, an average of just €3.2 million per financing round.
In retrospect, mega-investments are missing
A closer look at the figures also reveals that the lack of mega-investments was primarily responsible for the differences between 2019 and 2020. In 2020, only one startup was able to raise more than 100 million euros in a financing round, namely Lilium with its $240 million Series C (We have summarized the most important investments of the last year hereIn 2019, however, three startups succeeded: Flixbus (561 million dollars), Celonis (290 million dollars) and Commerce tools (130 million euros).
Financing rounds between €100 million and €10 million, however, were significantly more frequent in 2020, with a total of 30 Munich startups enjoying such a windfall. In 2019, there were only 16 financing rounds in this area.
Growth driver Corona
Depending on the industry, the coronavirus crisis has, in retrospect, developed into a veritable growth driver. This was especially true for healthcare startups. They were able to raise significantly more money in 2020 (a total of €192 million) than the previous year (€132 million). But sectors that digitize activities that are difficult to carry out under the coronavirus restrictions also saw significant growth. For example, investments in EdTech startups rose from €990,000 to €7.7 million. Sports startups raised significantly more funding, raising €22.7 million (2019: €1.4 million), and the enterprise software sector also saw a notable increase, reaching €185 million (2019: €111.5 million excluding Celonis and Commercetools).
Munich-based robotics startups were also able to raise significantly more money, although the connection to the coronavirus crisis is less clear here. At €36.4 million, the industry raised ten times more than it did in 2018 (€3.6 million).
The fintech, legal, and security sectors, on the other hand, secured slightly less funding than in the previous year. While a direct impact of the coronavirus crisis seems unlikely at first glance, it should be remembered that many investors, especially during the summer, focused on protecting their existing investments rather than adding new startups to their portfolios.
Surprise among travel startups
Travel startups hold a particular surprise in retrospect. Given the almost complete cancellation of the global holiday season, one might have expected investors to have largely avoided the issue last year. Instead, the industry's startups were actually able to raise slightly more money. While they received €62 million in seven financing rounds in 2019 – excluding the Flixbus investment – they raised €68.4 million across six financing rounds last year. The investors thus sent a signal that they believe in a speedy recovery for the industry – news that those affected will surely be happy to hear.
A review of the fourth quarter
In the fourth quarter of this year, Munich-based startups raised a total of almost €218.6 million, compared to €303.7 million in the same quarter of the previous year. The number of investment rounds in the fourth quarter of 2020, at 20, was also below the level of the previous year (38 financings).
The average size of investment rounds, however, increased compared to the same quarter of the previous year. While the average in Q4 2019 was €8 million, this figure rose to €10.93 million in Q4 2020. This means that the fourth quarter of 2020 was significantly above the annual average of €9.8 million.
The fund landscape in Munich is also developing positively. Munich-based venture capital firms launched five new funds in the last three months of last year, totaling €2.655 billion in investment volume. In contrast, only one fund with €200 million was launched during the same period a year earlier.
