So far, 2020 has been a rollercoaster of emotions for German start-ups. Despite the Corona crisis, the number of financing rounds rose significantly again in the first half of the year. Compared to the same period last year, it increased by eight percent to 360 deals, as EY found in the start-up barometer. However, the total value of the investments has fallen sharply: by 22 percent or around EUR 600 million to around EUR 2.2 billion.
Startups: more deals, less money
However, that decline doesn’t necessarily seem to indicate general investor reluctance in the pandemic. According to EY, the main reason for the deficit is the significantly lower number of major deals worth more than EUR 100 million: “In the first half of 2020, only two such deals were recorded, compared to seven in the same period last year.”
The auditors, who are under pressure because of the Wirecard fiasco, counted almost only a third as many financing rounds in June as in January. However, the investment volumes in start-ups remained fairly stable from March to June during the corona pandemic and even increased slightly in the last two months.
Software and analytics among the favorites
In particular, the software & analytics area had a positive effect on the balance sheet of the German start-ups. 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.
There were also clear winners and losers in the regions. One of the locations lost almost half of the funding sums, while the fiercest competition almost quadrupled its balance sheet.
These are the most important German locations for start-ups in 2020
# 10 Thuringia
Thuringia ranks tenth among the federal states in terms of start-up financing. According to EY, it recorded five financing rounds in the first half of 2020, two more than in the same period last year. The financing sums rose from two to five million euros. That meant tenth place nationwide. The remaining six federal states achieved a total of 16 financing rounds, three fewer than in the same period of the previous year.
# 9 Lower Saxony
Contrary to the positive trend, Lower Saxony 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 balance, however, 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 many as in 2019. On the other hand, the financing amounts remained almost at the previous year’s level at EUR 13 million instead of EUR 12 million.
# 7 Hessen
The Hessian start-up scene apparently suffered a lot 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 sharply, from 21 to six million euros. In this area, Hessen only came in tenth.
@imago images / Sylvio Dittrich
# 6 Saxony
Saxony, on the other hand, is on the upswing as a start-up location despite the pandemic. There was a clear increase in both the financing, which almost doubled with an increase from nine to 17 financing, as well as the sums, which grew from 29 to 40 million euros.
# 5 Hamburg
Hamburg, on the other hand, has lost a lot of its charisma. The number of financing rounds fell by around a third from 25 to 17. The location also suffered considerable financial losses. Investors gave only 26 million euros in the first half of the year instead of 81 million euros in the previous year. This put Hamburg in sixth place and just ahead of Bremen. Bremen did not make it into the top 10 in terms of the number of financing rounds. In terms of the sums collected, however, the small federal state was in seventh place nationwide with 15 million euros – compared to six million euros in the previous year.
# 4 Baden-Württemberg
Baden-Württemberg has so far been one of the losers among the start-up locations in 2020. EY recorded only 17 deals instead of 42 – and thus less than half of the previous year’s figure. The total amount also shrank – by around a third – to 105 million euros.
# 3 North Rhine-Westphalia
North Rhine-Westphalia also had to give up. While the number of financings rose nationwide, it fell in the most populous federal state from 42 to 32. Financing sums fell by more than half from 133 to 60 million euros. NRW lost further ground compared to the two front runners.
# 2 Bavaria
The Bavarian start-up scene took off in the first half of 2020. The number of deals shot up from 52 to 83. The financing sums could even be almost quadrupled. They rose from 204 to 773 million euros. According to the EY, this means that Bavaria accounted for a third (35 percent) of the nationwide deal volume. Two mega deals in particular were responsible for this. In March, 218 million euros went to the Bavarian air taxi company Lilium. According to the report, he managed the top financing round of the first half of 2020. The personal software Personio contributed a further 68 million euros in January. However, Bavaria could still not pose a threat to the front runner among the start-up locations.
# 1 Berlin
Berlin remains the center of the German start-up scene. Founders came to 149 financing rounds in the capital in the first half of 2020, 14 percent more than in the previous year. 41 percent of all deals nationwide were in Berlin – just as many as in Bavaria, North Rhine-Westphalia, Baden-Württemberg and Hamburg combined. The downward trend in funding sums 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) 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, 195 million euros), N26 (third place, 91 million euros) and Contentful (fourth place, 73 million euros).