German startups receive record €6.2 billion in investment

German startups receive record €6.2 billion in investment
A Flixtrain, part of Flixmobility, rolls through Berlin. Photo: DPA
New figures from management consultants at Ernst and Young (EY) show that never before has so much money been invested in German startups - with the bulk going to Berlin.

In total, founders and young entrepreneurs across Germany received €6.2 billion in 2019, 36 percent more than in the previous year, according to the report published earlier this week from the London-based firm.

READ ALSO: Germany ranks as best European country for startups

The number of financing rounds largely from private investors rose by 13 percent to 704. The winners are in the capital, where a full 60 percent of startup funding was funneled into.

Startups from the capital received a total of €3.7 billion out of 262 financing rounds – an increase of 41 percent over the previous year.

Startups across Germany

Bavaria is also on the way up as a startup hub. The southern state saw a grand sum of €1.55 billion funneled into it in 2019, an increase of 93 percent from the previous year.

Bavarian Minister President Markus Söder (CSU) is pursuing the ambitious goal of making Bavaria one of the leading digital states in Europe.

Startups in North-Rhine Westphalia also received more this past year (up ten percent to €268 million) as well as startups from southern Baden-Württemberg, where the investment volume almost tripled to €209 million in 2019.

The following graph shows the number of startups which received financing in 2019, broken down by state. Graphic by Ernest and Young.

In contrast, investment inflows from Hamburg (down 54 percent to €254 million) and Hesse (down 44 percent to €73 million) dropped significantly.

READ ALSO: The Hanseatic Silicon Valley? New digital centre to be built in Hamburg

Nonetheless more financing rounds were counted at all six top locations in Germany than in the previous year.

The strongest growth was recorded in North Rhine-Westphalia, where the number of financing deals rose by 45 percent to 87.

Winners are young mobility providers

The mobility provider FlixMobility was primarily responsible for the strong increase, reportedly receiving €500 million in 2019 – the largest sum ever paid to a German startup. 

“Top start-ups again had hardly any problems in obtaining fresh capital last year; the number of German Unicorns has risen further in 2019,” according to the report.

The large investment sum sheds light types of companies investors are now setting their sights on. According to Ernst and Young, the dominance of e-commerce business models was finally broken in 2019, with software and fintech also receiving a strong share of the funds.

Still mobility providers received €1.6 billion – funding that not only went to FlixMobility, but also second place recipient Get Your Guide, a Berlin startup that helps travellers to find tour guides in different cities.

In third place comes the Berlin-based used car platform Frontier Car Group, which saw an investment volume of €361 million last year. 

In the industry ranking, FinTech and software companies rank second and third with €1.3 and €1.2 billion in funding, respectively, received in 2019.

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Vocabulary

The ambitious goal – (das) ehrgeizige Ziel

The rise – (der) Anstieg

Business models – (die) Geschäftsmodellen

Second and third place – (die) Plätze zwei und drei

We're aiming to help our readers improve their German by translating vocabulary from some of our news stories. Did you find this article useful? Let us know.


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