Most of the 4,070 business angels active in 2020 come – unsurprisingly – from Berlin. A total of 579 of them are based in the German capital. Munich follows in second place with 366 business angels, and Hamburg ranks third with 281. There are also a few surprises among the top 20 cities: 44 of the angel investors come from London, placing the British capital just behind Stuttgart (46 business angels). Vienna (30) and Zurich (26) also made it into the top 20. Another notable feature is that two towns in the Munich area, Grünwald (41) and Gräfelfing (20), are also among the 20 cities with the most active business angels in Germany.
This local distribution is also important because many angels prefer to invest in their hometowns. For example, the 366 Munich angels invested in a total of 477 startups last year, including 254 from the state capital. This brings the share of domestic investments to 53 percent. The Berlin and Hamburg angels exhibit a similar behavior, with shares of 73 and 49 percent, respectively. In Frankfurt am Main, Cologne, and Düsseldorf, the investment focus is on Berlin in addition to their hometowns; for Stuttgart angels, Munich is another attractive location.
The preferences of business angels
The most popular sector for angel investors to invest in is medicine, which, according to the study, saw 946 individual investments last year. Software ranks second with 646 investments, followed by e-commerce with 519 investments. However, this may not be solely due to the preferences of business angels; supply is also likely to determine demand. As in 2019, medicine, software, and e-commerce were the three sectors with the most startups in 2020.
For these investments, business angels must decide whether to invest in a startup as an individual or through a holding company. There are two almost equally large camps: A narrow majority of 52 percent, however, opts for direct investment as an individual. The study authors attribute this to the fact that the ongoing costs of a holding company are not justified compared to the tax advantages.
A look at the gender ratio shows that women are significantly underrepresented. Only 11 percent of all angel investors who invested in at least one startup in 2020 were female. While this is still more than the previous figures Business Angel Network Germany estimated 7 percent – on the other hand, the rate is still far from the 25 percent targeted for 2025.
About the study
The “Startupdetector Report 2020” is based on the announcements of the German Commercial Register, which Startupdetector analyzes weekly. All new entries and capital increases from January 1, 2020, to December 31, 2020, were taken into account from the commercial register announcements of Department B (HRB). Publicly available data on management was also collected, for example, to make statements about the age, gender, and experience of founding personalities. For the purposes of recording startup financing rounds, only companies that were less than ten years old at the time of investment were considered. Only capital increases with external acquirers were considered as investments and included in the analysis.
