One more A study found that more venture capital flowed into German startups last year than ever before: Almost 4.6 billion euros were invested in German startups last year. The increase was particularly strong in Bavaria.
The management consultancy Ernst & Young (EY) reports a 7 percent increase compared to the previous year. The number of investments also reached a new high of 615, compared to 507 transactions the previous year. Peter Lennartz, Partner at EY, says:
"2018 was another successful year for Germany as a startup location—the volume of pure venture capital investments even rose to record levels. In addition, more and more German startups are receiving fresh capital."
“The startup location Bavaria with its center in Munich is currently developing strongly”
Despite a noticeable decline, most of the capital flowed to Berlin in 2018: Capital-based startups secured a total of €2.64 billion in 247 financing rounds. The financing volume thus fell by 11 percent compared to 2017, while the number of deals increased by 6 percent. Accordingly, more investments were made in the capital, with an average lower volume per deal.
The trend is different in Bavaria. Nationwide, the Free State remains in second place behind Berlin, both in terms of the number and volume of investments, but has recorded significant increases: The number of deals closed in Bavaria grew by 63 percent, from 76 to 124. The growth in deal volume was even stronger: Compared to 2017, Bavarian startups were able to almost double the amount of fresh capital raised, from €407 million to €802 million. In terms of the number of deals, Bavaria thus relegates North Rhine-Westphalia to third place with 60. Hamburg ranks third in terms of investment volume with €548 million. Hubert Barth, Chairman of the Management Board of EY Germany, says:
"Bavaria, with its center in Munich, is currently developing strongly and catching up rapidly. The combination of cutting-edge research, enormous economic power with numerous DAX-listed companies, and a high density of venture capital investors, coupled with a high quality of life, is developing a promising dynamic."
In contrast to the recent Barkow Consulting EY also includes cash inflows from IPOs and ICOs in its published figures. German startups raised €331 million through their IPOs, and companies secured €255 million through the issuance of crypto coins through ICOs.
“Good news for Germany as a high-tech location”
As in the previous year, most of the money flowed into e-commerce companies in 2018. However, the total amount fell by 12 percent compared to 2017, to €1.64 billion. This segment's share of the total financing volume shrank from 42 to 35 percent. In contrast, the Software & Analytics segment saw a massive increase. This segment encompasses highly technical business models from the areas of AI, blockchain, AR, VR, cloud computing, cybersecurity, and analytics. The investment volume here more than doubled from €295 million to €670 million compared to the previous year. The number of financings rose from 75 to 148, surpassing e-commerce startups in terms of the number of financing rounds (101). EY partner Peter Lennartz says:
"Although most of the money is still being invested in e-commerce business models, we are seeing that a growing number of highly innovative and technology-driven startups in the fields of artificial intelligence, blockchain, and virtual reality are now attracting double-digit millions of dollars. This is good news for Germany as a high-tech location."
