German start-ups enjoy record breaking €6.2 billion windfall

03 February 2020 Consultancy.eu

German start-ups are facing boom times. According to a new study by EY, growing interest in innovation from corporates coupled with a vigorous appetite for investments from financial investors is behind a record breaking year for Germany’s start-up scene.

The total value of investments in start-ups increased by more than a third to €6.2 billion last year, and up nearly threefold compared to three years previous. The number of investment rounds meanwhile increased by 13% to just above seven hundred. 

Similar to in previous years, the lion's share of the capital invested went to start-ups based in Berlin. Start-ups in Germany’s capital received a total of €3.7 billion euros from 262 financing rounds – an increase of 41% compared to the previous year. Investments in Bavaria-based start-ups increased even more: by 93% to €1.6 billion. 

Zahl und Wert (in Millionen Euro)

Start-ups based in North Rhine-Westphalian (+10% to €268 million) and Baden-Württemberg (+300% to €209 million) also received more money than in the same period last year. However, counterparts based in the Hamburg and Hesse region saw financial interest in their company drop, by -54% and -44% respectively.

Commenting on the analysis, Hubert Barth, the CEO of EY Germany, said, “German start-ups have never received so much money as they did last year; the financing boom continues unabated.” 

Notably, the number of large financing deals – transactions with a capital injection of €100 million or more – more than doubled, from six in 2018 to 13 in 2019; seven in the first half of the year and six in the second half of the year. The capital raising by FlixMobility was the stand-out deal, at €500 million, the largest amount ever invested in a German start-up, followed by GetYourGuide (€428 million), Frontier Car Group (€361 million), N26 (€266 million) and Celonis (€261 million). 

Start-up-Finanzierungen in Deutschland 2019 und 2018

One factor driving growth in the venture capital market is growing availability of funds, said Peter Lennartz, a partner at EY. “There is a lot of liquidity in the market and it continues to rise. Financially strong and predominantly international investors from the US, the UK and Asia are particularly interested in large transactions, also because valuations in Europe are still relatively cheap compared to Silicon Valley.”

Illustrating the market’s growing liquidity, a record number of start-ups have received fresh money, with the number of early-phase investment rounds (up to €5 million) rising by 27% to 541. FinTechs and software companies ranked second and third in the industry, raking in €1.3 and €1.2 billion respectively. They were outperformed only by the mobility start-ups, picking up €1.6 billion. Last year’s top segment, e-commerce, however saw its total investment value more than halve to €730 million. 

In related news, a recent research by KPMG found that the value of venture capital financing injected by strategics and financial investors into European start-ups last year reached its highest level ever.


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