So far, 2020 has been an emotional pool for German start-ups. Despite the Corona crisis, the number of rounds of financing rose significantly again in the first half of the year. It increased by eight percent compared to the same period last year to 360 deals, as EY stated in the start-up barometer. However, the total value of the investments fell sharply: by 22 percent or around 600 million euros to around 2.2 billion euros.
Start-ups: more deals, less money
However, this decline does not seem to indicate a general reluctance on the part of investors in the pandemic. According to EY, the main reason for the minus is the significantly lower number of large deals in the amount of more than EUR 100 million: “In the first half of 2020 only two such deals were recorded, in the same period last year there were seven.”
The auditors, who are under pressure due to the Wirecard fiasco, counted almost a third as many financing rounds in June as in January. However, investment volumes in start-ups in the corona pandemic remained fairly stable from March to June and even increased slightly in the past two months.
Software and analytics among the favorites
The Software & Analytics area in particular had a positive impact on the balance sheet of German startups. According to the report, most of the money was invested here, 30 percent more than in the first half of 2019. Three of the ten top deals were in this industry. In contrast, the Mobility and FinTech / InsureTech areas generated significantly less interest than in the previous year.
The regions also had clear winners and losers. One of the locations lost almost half of the funding, while the fiercest competition almost quadrupled the balance sheet.
These are the most important German locations for start-ups in 2020
# 10 Thuringia
Thuringia is tenth among the federal states in terms of start-up financing. According to EY, it recorded five rounds of financing in the first half of 2020, two more than in the same period last year. The financing amounts rose from two to five million euros. That meant tenth place nationwide. The remaining six federal states received a total of 16 financing rounds, three less than in the same period last year.
# 9 Lower Saxony
Lower Saxony, contrary to the positive trend, was unable to increase the number of financing rounds. Instead, they stayed at the previous year’s figure of seven laps. For this, the financing amounts increased from three to five million euros. With this record, Lower Saxony was only ninth in Germany.
# 8 Rhainland-Palatinate
Rhineland-Palatinate recorded eight start-up financings in the first half of 2020, twice as much as in 2019. However, the total financing amounts remained at the previous year’s level at EUR 13 instead of EUR 12 million.
# 7 Hesse
The Hessian start-up scene apparently suffered badly during the Corona crisis. The number of financing rounds fell from 15 to nine. That was only enough for seventh place nationwide. The investments collected shrank even more, from EUR 21 million to EUR 6 million. Hessen was only tenth in this area.
@imago images / Sylvio Dittrich
# 6 Saxony
Saxony, on the other hand, is on the rise as a start-up location despite the pandemic. There was a significant increase both in financing, which almost doubled with an increase from nine to 17 financing, and in the amount, which increased from 29 to 40 million euros.
# 5 Hamburg
Hamburg, on the other hand, has lost much of its appeal. The number of financing rounds fell by around a third from 25 to 17. The location also lost a lot of money. In the first half of the year, investors gave only EUR 26 million instead of the EUR 81 million in the previous year. This put Hamburg in sixth place and only just ahead of Bremen. Bremen did not make it into the top 10 in terms of the number of financing rounds. However, the small federal state was in seventh place nationwide with 15 million euros – compared to six million euros in the same period last year.
# 4 Baden-Wuerttemberg
Baden-Württemberg has been one of the losers among start-up locations in 2020. EY only had 17 deals instead of 42 – less than half the previous year’s value. The total also shrank – by about a third – to EUR 105 million.
# 3 North Rhine-Westphalia
North Rhine-Westphalia also had to drop feathers. While the number of financings rose nationwide, it fell in the most populous federal state from 42 to 32. The funding sums fell by more than half from 133 to 60 million euros. As a result, NRW continued to lose ground compared to the two leaders.
# 2 Bavaria
The Bavarian start-up scene started in the first half of 2020. The number of deals shot up from 52 to 83. The financing amounts could even be almost quadrupled. They rose from 204 to 773 million euros. According to EY, Bavaria accounted for one third (35 percent) of the nationwide deal volume. Two mega deals were particularly responsible for this. The Bavarian air taxi company Lilium received EUR 218 million in March. According to the report, he managed the top financing round of the first half of 2020. The Personio personal software contributed a further EUR 68 million in January. However, Bavaria still could not become the leader among the start-up locations.
# 1 Berlin
Berlin remains the center of the German start-up scene. Founders had 149 financing rounds in the capital in the first half of 2020, 14 percent more than in the previous year. Nationwide, Berlin accounted for 41 percent of all deals – just as many as in Bavaria, North Rhine-Westphalia, Baden-Württemberg and Hamburg combined. The downward trend in financing amounts was also noticeable there. The balance sheet fell from 2.14 to 1.14 billion euros. However, more than every second euro invested (52 percent) thus benefited a Berlin start-up. According to EY, the federal capital recorded three of the top five financings in the first half of the year: Grover (second place, EUR 195 million), N26 (third place, EUR 91 million) and Contentful (fourth place, EUR 73 million).