Start-ups in Germany raised more money last year than ever before. According to a new study, young companies received a record amount of almost 17.4 billion euros in venture capital from investors - more than three times as much as in the initial year of the coronavirus pandemic, 2020, (5.3 billion euros). The number of financing rounds rose sharply by 56 percent to 1,160, the consulting firm EY announced on Thursday when launching the report. Founders in Berlin raised by far the most money, followed by the southern state of Bavaria. They were also ahead when it came the large deals. Most venture capital flowed into start-ups from the finance, online trading, and software sectors.
Start-ups with their mostly technology-based business models are benefiting from the fact that digitalization has received a boost during the pandemic. Whether it's working from home, online shopping, streaming, food delivery, or financial transactions, the coronavirus crisis is amplifying trends.
"The pandemic is increasingly proving to be a catalyst for a start-up funding boom," says EY partner Thomas Prüver. More and more startups are getting fresh money, he says, and the sums are rising rapidly. For example, the number of large deals with a volume of more than 100 million euros quadrupled in 2021. In addition, there is a lot of investment pressure among investors. "There is a lot of money in the market."
However, the financial injections for founders were concentrated in a few locations. 10.5 billion euros in venture capital flowed to Berlin, giving the start-up stronghold a 60 percent market share. Bavaria received 4.4 billion euros (26 percent market share). Other German states also recorded large increases, but followed at a considerable distance - for example Baden-Württemberg (599 million euros), North Rhine-Westphalia (566 million euros) and Hamburg (459 million euros). Bavaria has established itself as a start-up location alongside Berlin, Prüver said. "In contrast, it is difficult for the other start-up locations to keep up."
According to the report, the largest transaction in Germany in 2021 was a cash injection of 861 million euros for Berlin-based food delivery service Gorillas. It was followed by an 830 million euros investment in Munich-based software provider Celonis. Behind them came two other Berlin-based startups, smartphone bank N26 (775 million euros) and broker Trade Republic (747 million euros). In total, EY counted eight financing rounds of more than 500 million euros - there was not a single one of this size in the previous year. The study looked at companies that were founded within the previous 10 years.
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