Founder in financial crisis
Start-ups are fighting for money from investors
As interest rates have risen, many start-ups have slipped into a financing crisis. This year the situation remains difficult, according to a new study. But in the long term the balance is positive, especially for Berlin.
According to a new study, German start-ups continue to have great difficulty getting investor money. Tech companies in this country are likely to raise around 6.7 billion US dollars in venture capital this year (a good 6.3 billion euros), estimates the London venture capitalist Atomico in its new report on the state of the start-up industry in Europe. That would be even less than the $7.1 billion in 2023, which was already considered a difficult year.
Atomico believes that tech companies across Europe are likely to perform worse than last year. Accordingly, companies are expected to raise around $45 billion from investors in 2024 – slightly less than in the previous year ($47 billion). Venture capital, which specialized funds use to invest in start-ups, for example, is considered key to the growth of young companies.
In the long term, Atomico draws a positive conclusion about the start-up industry in Germany and Europe. “The continent has made enormous progress in the past ten years,” says co-author Tom Wehmeier.
Enormous growth over ten years – Berlin is way ahead
Since 2015, German tech companies have raised $74 billion, writes Atomico. In the ten years from 2005 to 2014 it was only 8.1 billion US dollars. Berlin, for example, has caught up with the world’s leading start-up cities. Here too, Atomico is observing a tenfold increase in funds in a long-term comparison.
Europe is doing well when it comes to start-ups and financing in the early growth phase, writes Atomico. Berlin is one of the strongest addresses globally. Germany is also doing well when it comes to the future topic of artificial intelligence (AI): local AI startups raised around $1.4 billion in 2024 – fifth place worldwide.
Behind the USA when it comes to large sums of money
However, in the later growth phase of start-ups, Europe lags behind the USA. The probability of receiving financing of more than $15 million is twice as high for American start-ups as for European ones. In Europe, pension funds hardly invest in venture capital – unlike in the USA.
German founders have been suffering from increased interest rates for a long time, and financing for start-ups collapsed in 2023. Most recently, the consulting firm EY and the development bank KfW saw a recovery. The environment has improved with falling key interest rates.
dpa
Source: Stern
