CAPTION: Start-ups in southwestern Germany feel restraint from investors. (picture alliance/dpa)
Start-ups in the southwestern German state of Hesse are currently experiencing a reluctance on the part of investors. This affects companies "across the board," said Sebastian Schäfer, managing director of the "TechQuartier" startup center in the city of Frankfurt am Main. Alexander Hirschfeld of the German Start-ups Association also notes: "We see that the start-up business climate is also trending downward. Especially when looking to the future." The reluctance of investors is particularly noticeable in larger financing rounds, although solid business models still have a good chance of getting money, he said.
A spokesman for the Hessian Ministry of Economics stated that the number of financing rounds and the amount of investments since the beginning of the year have been at a similar level to the same period last year. According to the report, notable investments included the start-ups Wingcopter (drones) with 42 million euros, Enviria (solar concepts, 22.5 million euros), and Node Energy (energy supply, 7 million euros).
Start-ups that focus on renewable energy or target business customers are better positioned than those that target end customers, according to Schäfer. In Hesse, the financial start-ups sector focused on the banking center of Frankfurt are doing well. In addition, the focus there is increasingly on business models aimed at companies. Increases in key interest rates are a key factor in investor reticence. In addition, the Ukraine war and the energy crisis are causing uncertainty.
According to the auditing and consulting firm EY, investments in start-ups declined nationwide in the first half of the year. According to the report, start-ups raised around 6 billion euros in venture capital - down from 7.6 billion euros in the same period last year. However, this was still the second-best first half of all time, it said.
According to Schäfer, companies in growth phases are now facing tougher negotiations. "Some won't make it either," he said. Young companies that do not rely on outside capital, meanwhile, are less affected, he said. According to the Hessian Ministry of Economics, existing start-ups are more likely to be hit by the gloomy business climate, while there is more activity in start-up ideas and start-up consulting.
CAPTION: Start-ups in southwestern Germany feel restraint from investors. (picture alliance/dpa)
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