Germany’s startup ecosystem is set to receive a €12 billion (around $13.4 billion) shot to the arm as funding levels in the country continue to fall.
This week at at the Startup Germany Summit 2024 in Berlin, the German government said it would invest €12 billion into domestic startups by 2030, alongside private capital sources including Deutsche Bank and Allianz.
The government’s announcement is the latest in a series of measures that Germany has put into place to stimulate growth for its startups. Last November , it closed a €1 billion fund of funds to back German and European VC vehicles, as part of its Future Fund program launched in 2021.
Germany has also set out new measures to build up its startup ecosystem and draw in more private capital. This includes expanding cooperation between investors and universities, strengthening fund-of-fund structures and improving framework conditions for IPOs.
VC dealmaking in Germany, as in much of Europe, has been on the decline in the last few years. Last year, startups raised €7.5 billion, according to PitchBook data—less than half of that invested in 2021.
With less than four months left in the year, €5.7 billion has been invested which, at the current pace, would see 2024’s annual deal value total come in below last year’s.
“The commitments made by the economy show that there is a willingness to invest,” finance minister Christian Lindner said. “We will only create additional growth if we succeed in mobilizing more private capital. What we do not need are ever-new subsidies and economic decisions guided by politics. [...]We must not let up now and must work towards freeing start-ups even more than before from too much bureaucracy and other unnecessary burdens.”
While funding levels have been down, Germany has performed better this year than many of its European peers, including its main rival: France.
Despite its reputation as an AI hub, overall VC levels in France are on track to decline even further than those in Germany. So far this year, €5.4 billion has been raised compared to €9.5 billion in 2023.
A comparatively high number of mega-rounds—defined as over €100 million—has helped push German deal value higher than in France.
The largest to have closed this year is defense tech startup Helsing’s €450 million Series C in July led by General Catalyst and Elad Gil. Other outsized deals include AI translation platform DeepL’s $320 million investment led by Index Ventures.
Featured image by Sean Gallup/Getty Images
