Increased interest rates, economic concerns and more risk-averse investors are putting a strain on the German start-up scene. The number of start-ups fell in 2023. Research-related locations perform well.
Amid tough financing conditions, fewer start-ups emerged in Germany in 2023. The number of new startups fell by five percent compared to the previous year to just under 2,500, as figures from the startup association show. The strongholds of Berlin and Munich in particular felt the crisis in the industry. Compared to the record year 2021, when 3,196 start-ups were founded nationwide, the decline is a good fifth (22 percent).
The upward trend from the first half of 2023 is over, the startup association reported. The decline in start-ups is affecting almost all industries, with only the software sector increasing. There was a particularly downward trend in start-ups in online retail – it was said that the weak consumer climate was having an impact here. The analysis company Startupdetector evaluated commercial register data for the study.
Startup metropolises under pressure
With 468 start-ups in 2023, Berlin remained unchallenged in first place, ahead of Munich (187). However, the two start-up strongholds recorded declines of 7 and 13 percent respectively compared to the previous year, while Hamburg increased by 10 percent with 158 start-ups. “The start-up engine in the central hotspots is stuttering,” stated the startup association in Berlin. Deputy chairwoman Magdalena Oehl spoke of overall robust figures despite global crises. However, the decline shows “how difficult the financing environment currently is,” especially in the capital-intensive start-up strongholds.
During the Corona pandemic, the German start-up industry benefited from a boost in digitalization and low interest rates at the time. Delivery services and financial brokers, for example, experienced a boom. But with increased interest rates and economic concerns, investors have been holding back on injecting funds into growth companies. This makes it harder for start-ups to get money and many have had to cut jobs.
Although a third of all start-ups occur in Berlin, Munich and Hamburg, their share has fallen continuously since 2019, according to the study. In contrast, regional states such as Baden-Württemberg, Lower Saxony and Saxony increased significantly in 2023. But hotspots such as Munich in Bavaria or Dresden and Leipzig in Saxony also dominate in the area, said Arnas Braut, co-founder of Startupdetector.
When it comes to start-ups per capita, research-related locations such as Darmstadt, Karlsruhe and Heidelberg performed particularly well, directly following Berlin and Munich. “Innovative start-ups are increasingly emerging around German universities that are quickly bringing scientific breakthroughs into business practice,” it said.
Source: Stern
