What challenges do German startups face? What motivates the founders? What is the business climate like in the industry? The answers to these and other questions are determined by Startup Association once a year with a large-scale study. For the DSM 2024, 1,828 startups were surveyed.
The 12th edition of the DSM shows that the challenging overall economic situation is also affecting startups. While the number of employees has increased steadily in recent years, this year it has fallen from 18.9 to 16.7. The proportion of female startup founders has also declined, from 20.7 percent to 18.8 percent. At the same time, more than half of startups (50.7 percent) rate the current financing situation as negative.
Profitability becomes the main goal
These challenges have led to a strategic adjustment. Profitability is now the primary goal of 73.8 percent of founders, compared to only 58.1 percent in 2021. Many are also relying on the future technology of artificial intelligence. At 22 percent, more than one in five startups sees the technology as the core of their product.
"The motto today, more than ever, is to solve real problems and increase productivity. German startups have internalized this and flipped the switch: profitability, growth, AI, spin-offs, and deep tech – these priorities are shaping and changing the startup ecosystem,"
so Verena Pausder, Chairwoman of the Startup Association.
Despite numerous problem areas, the overall assessment is improving. Of those surveyed for the DSM, 61 percent rate the ecosystem generally as positive. This compares to only 57.7 percent in 2023. Furthermore, 58 percent of founders expect the economic situation to improve in the coming months. By the end of 2025, 80 percent even anticipate a positive development.
Universities & Established Institutions: Collaboration is (not yet) working here
Startups play a significant role in translating research into practice. At 55.1 percent, more than half of startups collaborated with or received support from universities or research institutions during their founding process. Last year, the figure was 49.2 percent. 80.5 percent of founders rated their proximity to universities positively – a new record. 11.4 percent of startups can be classified as deeptech companies that bring new research-based technologies to market.
In addition to support from academia, startups also rely on cooperation with established companies. This works well as long as they act as customers. The share of B2B in the total revenue of German startups continues to rise from 70.4 percent in 2023 to 74.7 percent.
But established companies are also relevant as partners in research and development and sales structures. According to DMS, 61.9 percent of startups are active with projects in this area, compared to 71.8 percent in 2020. Collaboration between startups and established companies is therefore lagging behind. Only 37.5 percent of startups rate the opportunities for cooperation with established companies positively, down from 40.5 percent in the previous year.
Pausder says:
"Compared to other business locations, we have a huge asset with our broad SME sector and strong industrial base, which we are still underutilizing. Collaboration with startups, corporate investments, and acquisitions are among the most important ways for companies to innovate—but unfortunately, not all companies in Germany have recognized this yet."
Demand for capital is growing
74.1 percent of startups plan to raise external capital next year. At the 2023 DSM, 69.5 percent said so. The amounts requested are also increasing. Last year, 58.7 percent needed capital of €500,000 or more; in 2024, that number will rise to 69.9 percent.
However, only just under a third (29.8 percent) rate access to capital and investment positively, lower than in previous years (2022: 37.2 percent; 2023: 33 percent). According to DSM, there is a great need to catch up when it comes to startup financing, and the situation is becoming increasingly acute in the current economic climate.
The entire DSM 2024 is available here for further reading.
