Despite the weakening economy, the German start-up industry is producing more and more start-ups worth billions - also thanks to the boom in artificial intelligence. By the end of September, ten new start-ups with a company valuation of at least one billion euros had emerged in this country, according to the “German Startup Monitor”. The start-up association in Berlin announced that these are more new billion-dollar start-ups (“unicorns”) than at any time since 2021. This brings the total number of unicorns to a record 39.
There is also more money flowing into the start-up industry than it has been for a long time. At around eight billion euros, German start-ups had already raised more venture capital by the end of September than in the entire previous year with around 7.5 billion euros, the report shows. Extrapolated to the current year, 12 billion euros are possible, which would be more than ever since the boom year of 2021. In addition, almost 3,000 new businesses were founded.
Armament and wars ensure a boom
“Germany is starting up again - on a broad scale and on a strong technological basis,” commented Verena Pausder, CEO of the startup association, on the report. With data analyzes and a survey of around 1,800 growth companies, the German Startup Monitor is the most comprehensive study on the start-up industry in the country and has been published annually since 2013.
The billion-dollar start-ups include giants such as the online broker Trade Republic, the smartphone bank N26 and the software company Personio. New additions this year include the software company Osapiens, Neura Robotics and the defense company Stark Defense.
The start-up industry is benefiting from increasing investments in defense companies, including the drone manufacturers Quantum Systems and Helsing, which are raising a lot of money from investors. Another growth driver is AI. For 53 percent of the start-ups surveyed, technology is at the center of the product - in 2024 it was only 39 percent. At the same time, AI makes starting a business much easier.
Startup industry is growing, but dependent on US investors
However, the report also shows weaknesses in the German start-up industry. This means that the capital that flows is more concentrated at the top. “In general, however, the number of financing rounds is around a quarter below the 2021 level.” According to the survey, 89 percent of founders are calling for more venture capital from Germany and Europe. “The available capital is not enough to make the leap to the top of the world,” complains Pausder.
German start-ups have been lagging behind internationally in terms of venture capital for years. Because in Germany, unlike in the USA, there are too few large investors. Professional investors such as insurance companies and foundations invest little money in venture capital, partly because of strict investment regulations. The WIN initiative, with which the federal government and the KfW development bank want to mobilize around 25 billion euros from large investors by 2030, is progressing rather slowly.
When it comes to the booming topic of artificial intelligence, the problem has even worsened, as the Startup Monitor shows. According to this, almost 308 billion euros will have flowed into the AI sector in the USA in 2026, while in Europe as a whole it was only a good 27 billion.
USA attracts successful founders
There also remains the danger that successful founders will leave. According to the German Startup Monitor, the vast majority of start-ups (62 percent) are drawn to the USA for a potential IPO, while only 27 percent prefer Germany. And when it comes to digital technologies, 64 percent rely predominantly or entirely on US providers - also due to the lack of European alternatives. One consolation: moving away has not yet been an issue for most founders (61 percent).
Germany has “unbelievable potential,” says association leader Pausder, also with a view to the recent successful rocket launch off Isar Aerospace. She demanded that the federal government must implement its start-up strategy and facilitate financing. In addition, founding companies in the EU with the planned legal form EU Inc. would have to be simplified.
Startup industry benefits from strong research
The association sees strengths in the connection with universities. Every second start-up (51 percent) is supported by research institutions. In 59 percent the product is based on new scientific findings. Universities are the most important pillar in the ecosystem, says Alexander Hirschfeld, research expert at the startup association. “Compared to the quality of the German research landscape, there are still far too few people starting their own businesses.”
The shortage of skilled workers, however, is less of a concern for start-ups. Only 15 percent see it as a major hurdle - two years ago it was 30 percent. 83 percent plan to hire new employees within twelve months.
