According to EY, there were 219 financing rounds in the capital in the first half of 2022.
(Photo: Imago/Westend61)
Frankfurt The consequences of the war in Ukraine, rising interest rates and the poor economic outlook put a damper on the start-up culture in Germany in the first half of 2022: The young companies had to cope with lower financing flows during this period, as the start-up barometer of the auditing and consulting company EY shows (Ernst & Young) shows.
The total value of venture capital investments in young German companies fell by 20 percent in the first six months of this year compared to the same period last year to just over six billion euros. According to EY, however, this is still the second highest value in the first half of the year. The number of financing rounds fell by seven percent to 549.
The activities have recently decreased, especially in Berlin: There were only 219 financing rounds there in the first six months, in the first half of 2021 there were still 264. More than every second euro invested in start-ups recently ended up in the capital, 3.25 billion euros in total. That was 868 million euros less than in the same period of 2021.
EY partner Thomas Prüver rates the numbers positively despite the decline: “The investment level remains high compared to the past few years – at least there is nothing to be seen of the much-feared slump.” There is still a lot of liquidity in the market – “Investors but take a closer look at where they invest”. However, the latest figures do not yet fully reflect the uncertainties in the market.
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Even if Berlin has recently experienced a setback, Germany’s start-up heart continues to beat in the capital and attracts talent from Germany and abroad. This is a competitive advantage, especially in relation to the ongoing shortage of skilled workers. According to EY, increases in investments in Hesse and Saxony also show that a start-up with the right idea and a promising plan can be successful in any part of Germany.
Energy industry is experiencing a financing boom
According to EY, there were a total of 15 top deals with a volume of more than 100 million euros in the first half of 2022. The logistics start-up Forto (EUR 229 million) and the online broker Trade Republic (EUR 227 million) received the largest amounts of financing. Taxfix, 1Komma5° and Hy2gen also broke the EUR 200 million mark.
According to the study, most of the venture capital flowed into the area of software and analytics at a good 1.8 billion euros. The energy segment experienced a real financing boom: the industry received more than 900 million euros – around 870 million euros more than in the first half of 2021.
The e-commerce sector, on the other hand, experienced a slump: The start-ups received only 320 million euros, in the first half of 2021 it was still a good one billion euros. Fintechs also received significantly less money.
The EY figures match an analysis by the state development bank KfW, according to which three quarters of investors assume that green and climate tech will play a greater role in the future. A good two-thirds also see a trend in the deeptech and cybersecurity sectors. Deeptech includes, for example, biotechnology and machine learning, where the development times are usually long and the capital investment high. According to the KfW survey, investors are giving a poor forecast for the e-commerce sector. Half see a loss of importance here.
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