Berlin With the two software companies Celonis and Personio, two of the currently most valuable German start-ups come from Bavaria. The chances that others will soon follow have increased in the past year. For the first time, more companies were founded in Bavaria than in Berlin. This emerges from the annual report of the analysis company Startupdetector, which is exclusively available to the Handelsblatt. According to this, 571 start-up companies were founded in Bavaria last year, while there were only 540 in the capital.
“In Bavaria, we have managed to build up an effective ecosystem over the last ten to 15 years,” says Carsten Rudolph from the Bavarian start-up network Baystartup. At the same time, the companies that have emerged are strongly geared towards business relationships between corporate customers and have focused less on trending topics. This will now benefit them in the crisis.
The start-up figures are based on surveys from the commercial register. It shows that in view of the turnaround in interest rates, global economic weakness and reluctance on the part of investors, significantly fewer were founded. The boom is over. Last year, the total number of start-ups fell by more than a fifth to 2705 and thus fell below the value for 2020. In Berlin, the year-on-year decline was even around 30 percent.
Only Bremen and Mecklenburg-Western Pomerania recorded more start-ups. In Bremen, for example, the software start-up Jeckplan was created last year, which wants to digitize the tasks of carnival societies.
More start-ups only in the fields of environmental technology and blockchain
In most sectors fewer were founded last year than in the previous year. The declines were particularly sharp in the food and e-commerce sectors, which experts attribute to the high number of start-ups during the corona pandemic, which are no longer appropriate. Only in the environmental technology and blockchain sectors were there more new start-ups than in the previous year.
Greentech investor Charlotte Baumhauer from venture capitalist Squareone attributes this to new opportunities, among other things: “For example, we see many new software applications that in turn make it possible to build hardware much more cheaply, which was not possible five to ten years ago.”
A second factor is the market size. “With the challenges facing our society in the area of climate protection, the market potential seems to be limitless,” says Baumhauer, who recently invested in Berlin’s Greentech Carbon One, which aims to produce green methanol.
More angels and high-tech start-up funds at the forefront
In contrast to the start-ups, the number of financing rounds remained relatively stable at 2,185. The number of active investors even climbed by 776 to 8,040. The number of angel investors – i.e. private individuals who invest in start-ups in the early stages – rose particularly sharply.
For a number of years, national soccer player Mario Götze has also been investing in young companies such as the Berlin fintech Ride Capital or the platform for complaint management Sejcur. He advises taking a long-term view of the investments: “My credo is to invest independently of the market and trends – in teams and visions.”
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In order to bring together a round of financing, more investors were needed recently. While an average of 4.6 investors were sufficient in 2021, 5.2 investors were needed last year due to the lower willingness to pay of individual investors. “Investors’ willingness to pay has fallen across the board. As a result, entrepreneurs have to give up more shares for the same capital compared to the boom years 2020 and 2021. As a result, there is an increasing need for syndicates from multiple investors to meet capital needs,” says Andre Retterath, partner at early-stage investor Earlybird.
By far the most active investor was High-Tech Gründerfonds (HTGF). “We look at around 2,000 business plans a year, and we also screen around 10,000 other teams through database research or, for example, as jury members in business plan competitions,” says HTGF Managing Director Alex von Frankenberg. The plan is to complete around 40 new investments again in 2023.
“Venture capital is fun for me,” says Götze to the Handelsblatt.
(Photo: kolbert-press)
The HTGF can access deep pockets. In February, the early-stage investor closed a fund with a total volume of almost half a billion euros, making it its largest fund since it was founded 18 years ago.
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Investors are less willing to take risks
Despite the increased activities of the HTGF, it was particularly difficult for very young start-ups to raise funds last year. 18 percent fewer young companies received capital for their first round of financing. Instead, investments were made more frequently in later phases – usually when the business model has already proven itself on the market.
At the same time, this development is also an indication that investors are initially putting money into the existing companies in their portfolio and supporting them if necessary to keep them alive. This in turn meant that founders had to make do with their own investments and cash reserves longer in the early days before they could even hope for venture capital.
Female founders have always been an exception in the male-dominated German start-up industry. After years in which the rate rose, at least very slowly, there was even a downward trend last year. Only 15.6 percent of the financed start-ups had a woman on the executive board. In the previous year it was 16.4 percent.
In addition, in 2022 only around every fifth start-up was founded or co-founded by women. “When it comes to pitches, we are clearly outnumbered, if not the only ones
Founders – the same applies to initial investor talks,” says Sophie Schürmann, who co-founded the Peers platform, which aims to digitize psychotherapy.
More: The “It doesn’t work anyway” mentality: How Germany is falling behind.