Start-ups raise record sums – economy

Everything looks good: investments in German start-ups have tripled, 62% more funding rounds – the first half of 2021 looks much better for the founders than the epidemic year 2020. One thing is clear: compared in the start-up scene in the United States or in China, there is still a lot of catching up to do in this country. “The growing number of mega-transactions (…) should not obscure the fact that the majority of financial injections still go to very small transactions,” writes Thomas Prüver, partner at EY.

After all, agreements with a scope like 2021 have not yet existed in Germany. The Munich-based software company Celonis, which specializes in so-called process mining, that is, the filtering of company data from various systems, takes the top spot. It received US $ 1 billion from investors, the equivalent of around 830 million euros. Money that the company urgently needs to continue to grow and keep the competition at bay. The situation is similar with Trade Republic, an online brokerage from Berlin. The young company received 747 million euros from venture capitalists in May. Berlin insurance company Wefox and Flixbus (Bavaria) landed with 539 million euros each. The fifth, the Gorillas delivery service (241 million), is also based in Berlin.

Another problem is clear: Berlin and Bavaria clearly dominate start-up activity in Germany. Berlin start-ups closed 263 transactions in the first half of 2021, 120 in Bavaria. In North Rhine-Westphalia there were still 52, in Lower Saxony only 19. If you look at the money invested, the difference becomes even clearer. more blatantly: Von Of the total of all funding of nearly 7.6 billion euros, 54 percent (a good 4.1 billion euros) came from Berlin, 33 percent (2.5 billion euros) euros) from Bavaria. That leaves a paltry 13 percent or just under a billion euros for the rest.

“It’s not an or-or”

This concentration on a few hubs shows that universities and large companies play a role in a start-up ecosystem and are decisive for where start-ups are founded, explains Christoph Stresing, managing director of the Federal Association of German start-ups. “Tesla would probably not have settled in Brandenburg without its proximity to the Berlin start-up scene”, he says, “a dynamic is developing there”. But he doesn’t want to generalize that either. “It’s not an either-or,” he said. “It can of course also work elsewhere.” This is evidenced, for example, by the success of the Chemnitz Staffbase start-up.

When success sets in, young companies reach a threshold: to become really big, they would need a lot of money. Although the situation in Germany and Europe has already improved a lot, this is still the main reason why it often does not work with European unicorns, i.e. start-ups valued at a billion dollars. US dollars or more.

There is no shortage of capital, says Stresing: “The money is there. It just needs to be used correctly. It is crucial to increasingly mobilize the capital of private institutional investors for the territories of the future. This could be done, for example, with the announced fund of funds, which is provided by the federal government in the future fund that has already been launched. This is intended to mobilize “dormant private capital for the financing of startups in the growth phase”, as requested by its association in a thesis dissertation.

It also shows why this is important: the start-up and scale-up scene, i.e. companies that are already in a phase of rapid growth, already employ 415,000 people directly, or 1.6 million. indirectly. The figures could increase sharply, according to the association, but then the conditions would have to be created. Germany, for example, must become more attractive for foreign talent, start-ups must be made easier to compete as an employer compared to companies.

The government fails

Moreover, the start-ups themselves see the overall situation worse than before. In a survey by the Bitkom industry association, published a few days ago, only 39% believed that the situation for start-ups was better than a year ago. A fifth of business creators think the situation is worse. For politics, there are mostly bad grades, only three percent give the school a second year, there is no one. In more than a quarter of start-ups, the government has even failed. There is much to do for the next federal government.

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