Bavaria surpasses Berlin in funding for new businesses
In a significant shift in the German startup landscape, Bavaria has emerged as the frontrunner in attracting venture capital investment, surpassing Berlin in the first half of the year. According to a study based on data from the Crunchbase database and figures from startups and investors, Bavarian startups raised nearly 2.1 billion euros, significantly more than startups in Berlin (1.5 billion).
This trend can be attributed to Bavaria's robust presence of large, established companies and investors, as well as a thriving startup ecosystem in boom industries. Munich, the Bavarian capital, hosts numerous DAX, M-DAX, Tec-DAX, and S-DAX companies, providing a solid financial and industrial base. The region also boasts a strong venture capital and private equity investor presence, increasing the availability of capital for startups compared to Berlin.
The startup ecosystem in Bavaria benefits significantly from its economic strength, offering services, applications, or products to traditional industries such as automotive, machinery, and medical technology. Moreover, Bavaria has seen substantial growth in startup formations, backed by university spin-offs and strong local ecosystems, which fuel innovation and investment readiness.
Berlin, however, still leads in the number of funding rounds (132), but Bavaria is catching up in terms of large funding rounds and mega-deals. Notable recipients of venture capital in Bavaria include Helsing (600 million euros), Green Flexibility from Kempten (400 million euros), Quantum Systems, Scalable Capital, and Amboss (Berlin), making up the top 5 recipients.
The growth in venture capital for German startups increased by a third to 4.6 billion euros in the first half, with nearly every second euro going to Bavaria. This growth comes after a challenging period for the startup industry following the post-Corona boom crisis, with the first half-year of 2022 being the third-best since 2015.
EY partner Thomas Prüver notes that the changes in the German startup ecosystem over the past two years are significant. Investors are focusing on defense, AI, and energy technologies, areas where Bavaria is performing well. The number of funding rounds and large deals above 100 million euros also grew, suggesting a strengthening of the startup industry after a hard landing following the record year 2021.
In conclusion, Bavaria's advantage lies in its strong corporate backing, a thriving startup ecosystem, and success in growth industries, making it an attractive destination for venture capital investment. The gap between Bavaria and Berlin is widening, signaling a shift in the German startup landscape that is likely to continue in the coming years.
Other sectors, such as finance and technology, are also thriving in the startup ecosystem of Bavaria. This can be seen with the significant funding received by Quantum Systems and Scalable Capital, proving the region's appeal to a diverse range of investors.
