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In the second quarter of 2023, Munich-based startups raised around €437 million in capital – significantly less than in Q1 (€704 million) and the same quarter of the previous year (€803 million). The second quarter of 2021 also saw significantly more funding, at €1.9 billion. However, if we compare it to the last pre-crisis spring, Q2 2019, the months of April to June 2023 show an outstanding performance. Back then, only €33.9 million were raised. For all periods considered, no figures were announced for some financing rounds, which is why the final amounts are even higher.
Less money, fewer financing rounds
Large financing rounds did not dominate the funds raised this spring as much as usual. In Q2 2023, there was only one financing round above €100 million, the €150 million investment in Jolt Energy. (We have summarized the most important financing transactions of the past quarter here.) The differences compared to the previous year's quarters become significantly smaller if these mega-rounds are excluded. Thus, the €287 million for Q2 2023 is reduced to €400 million in Q2 2022 and €527 million in Q2 2021.
In addition to the total amount of investments, the number of financing rounds also continued to decline in the past quarter. It had already stagnated since Q3 2022, when it reached 50 rounds, followed by 53 in Q4 2022 and 49 in Q1 2023. With just 42 successful deals for Munich-based startups, the number plummeted again. The number of successful investments is thus at its lowest level since Q2 2019.
Average investment amounts (excluding mega-rounds), however, are experiencing the opposite trend. For the period from April to June of this year, the average per financing was €7 million. In the three months prior, this figure was only €5.2 million, and in the same quarter last year, it was €5.7 million.
American investors return
A trend from the first quarter of this year is also declining again: From January to March, contrary to the usual trend, investments were almost exclusively funded by German and European funds. Thus, the largest share of the €704 million raised, €472 million (67 percent), came from other European countries. German investors contributed a total of €182 million (25.9 percent). American investors were unusually modest, contributing just €33.4 million (4.7 percent). This despite the fact that there were three mega-rounds of over €100 million: Yfood, Isar Aerospace, and Integrity Next.
In the quarter just ended, American investors again increased their involvement in Munich. They invested around €111 million in startups from the state capital, accounting for 28.2 percent of the investment volume. However, at €193 million (49 percent), even more money came from other European countries. German investors contributed a total of €78.5 million (19.9 percent).
Exits, bankruptcies and new funds for the Munich startup scene
There has also been a lot of activity in the area of exits over the past three months. While there were no IPOs, there were a few acquisitions: a total of nine startups changed hands. For example, the platform for IT projects Casana acquired by the New York-based company Andela and the marketplace for sustainable sporting goods Planetics went to Khulula.
Insolvencies in the spring affected, among others, Sono Motors – the startup filed an application for protective shield proceedings in May – and BanovoAccording to the public portal for insolvency announcements, nine Munich-based startups, including Knister and Little Leaf, filed for insolvency between April and June.
There were three new investment funds in the Munich startup scene in the second quarter of 2023. Afinum closed its Afinum 9 fund with 420 million euros, which HV Capital Fund IX raised 710 million and Yttrium – formerly known as Digital+ Partners – filled its Digital Growth Fund II with 403 million euros.
