At the beginning of this year, a Study by the consulting firm EY 24 unicorn startups in Germany. A year earlier, there were only six young companies with a valuation of more than one billion dollars. The 18 new unicorns alone raised 7.1 billion dollars last year. Among the 24 unicorns are eight fintechs, four each from the online retail and mobility sectors, and three from the software and analytics sector.
Berlin-based fintech N26 has secured the most capital of all German startups to date, with $1.7 billion. It is followed by the two Munich-based companies with $1.4 billion and $1.3 billion, respectively. Celonis and Flixmobility.
The group behind unicorn startups, namely companies that have received at least $100 million since their founding, is also growing strongly – from 39 to 62. 41 of these top startups are based in Berlin, 14 in Munich. Thomas Prüver, Partner at EY, says:
"The German startup ecosystem has made a huge leap forward in the past year. More young companies have received fresh capital than ever before, the total investment volume reached a record level, and the number of unicorns has also multiplied."
He expects numerous other companies to reach a valuation of more than one billion dollars this year. The rapid increase in the number of unicorn companies last year can be explained as a coronavirus effect, says Prüver:
"After the cautious approach in 2020, investors were under great pressure to invest, and their coffers were full. At the same time, intense competition for attractive target companies has flared up, driving up valuations. And the low interest rate environment and inflation expectations have further increased the attractiveness of alternative investment opportunities."
In addition, according to Prüver, the professionalization of the tech ecosystem in Germany has increased significantly, driven by the network and capital of previously successful founders and investors.
He expects continued strong investment activity in Germany in 2022. This is likely to be driven by new venture capital funds active in the German market. Last year alone, the total volume of newly launched funds with a Germany focus reached $9.6 billion. The previous year, similar funds with a total volume of $8.6 billion were launched. Prüver says:
“The chances for promising startups to obtain growth capital have never been better than they are today.”
“Exit options have improved massively”
Exit activity also increased significantly last year: The number of mergers and acquisitions involving startups rose by 90 percent to 171 compared to 2020. More than two-thirds of the transactions—68 percent—were led by foreign investors. North American corporations, in particular, are interested in German startups: A total of 52 acquisitions of German startups by US companies were recorded last year—38 more than the previous year. Companies from other European countries acquired 49 German startups, and Asian companies acquired three German startups.
“Germany has earned a good reputation as a startup location, and the visibility of the German startup ecosystem has improved considerably in recent years,”
says Prüver. This increases the chances of young entrepreneurs for a successful exit:
"Over the past year, exit options have improved massively—whether through an IPO or a sale to a strategic or financial investor. This has brought further fresh money into the German startup ecosystem, which can now be invested."
