Rapid recovery after the crisis: start-ups receive record amounts

The money for startups in Germany is looser again: Young companies are benefiting from a digitization boom after the corona crisis year 2020. But it is concentrated in a few regions.

First a damper in the corona crisis, now the rapid recovery: German startups experienced a rain of money in the first half of the year. Young companies received the record sum of 7.6 billion euros from investors – three times as much as in the same period of the previous year and more than in 2020 as a whole. The number of financing rounds also rose sharply by 62 percent to 588, as the consulting company EY calculated. Accordingly, more startups received fresh money in the first half of the year than ever before.

Start-up industry on the upswing after pandemic

Last year the pandemic had the The upswing in the start-up industry slowed down considerably and makes the business of young companies more difficult, even if the initially feared start-up death did not materialize. “This year we are also seeing a corona effect, but in the opposite direction: financing activities and sums are exploding,” said EY partner Thomas Prüver about the study published on Wednesday. “Above all, however, sums of money are now flowing into individual start-ups that would have been unthinkable a few years ago.”

The number of transactions with a volume of more than 100 million euros climbed from two to 15, shows the EY analysis, which is available to the dpa. The number of medium-sized financing rounds between 50 and 100 million euros also doubled to 16.

On the one hand, there is a lot of liquidity in the market, which has to be invested in the low interest rate environment, explained Prüver. On the other hand, the market recognizes completely new perspectives for innovative technology companies. “In the pandemic year, digitization took a huge step forward.” New business models would be seen with different eyes.

Startups are dependent on money from investors, as they usually do not initially write any profits. Funds and large companies invest capital in promising companies in the hope that their business ideas will prevail and bring them ample profits. Startups are considered to be an important innovation driver for the economy.

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The corona crisis had ruined the plans of many start-ups. According to data from the state development bank KfW, around 537,000 people dared to take the plunge into self-employment in 2020, a good eleven percent fewer than in the previous year.

Berlin remains a startup stronghold

As in previous years, most of the money flowed into the startup stronghold Berlin. Founders from the capital collected 4.1 billion euros alone, more than three times as much as in the same period of the previous year. The number of financing rounds in Berlin climbed by 74 percent to 263. Bavaria followed in second place with fresh investments of 2.5 billion euros (previous year: 773 million euros). The number of financing rounds rose by 43 percent to 120.

Berlin and Bavaria together account for 65 percent of all financing rounds and 87 percent of the capital invested in Germany. “The really big deals in particular take place primarily in Berlin and Bavaria,” stated EY. They are also the most visible German startup locations internationally. Other federal states also recorded strong growth, but were unable to keep up with large deals – despite great efforts in many regions to strengthen the start-up industry.

For comparison: Berlin with 4.1 billion euros raised money and Bavaria (2.5 billion) are followed at a huge distance by Baden-Württemberg (307 million), North Rhine-Westphalia (171 million) and Saxony (134 million).

The largest sums in the first half of the year went to the Munich software company Celonis (830 million euros), followed by the Berlin online broker Trade Republic (747 million), whose app for securities trading experienced a boom during the pandemic. This is followed by the insurance startup Wefox and Flixbus with 539 million euros each, and the delivery service for groceries and supermarket goods Gorillas with 241 million euros. dpa

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