“The founding engine is stuttering”
Berlin and Munich attract fewer startups
January 12, 2024, 10:12 p.m
A challenging economic environment is causing problems for the German startup scene. Last year the number of new businesses fell to just under 2,500. Berlin and Munich in particular are losing their appeal. Regions away from the hotspots are becoming increasingly important.
Last year, slightly fewer startups were founded in Germany than in the previous year. The startup association recorded almost 2,500 new businesses in 2023, as shown in the published annual report. This is a decrease of almost 5 percent compared to the previous year. Compared to 2022, it is 22 percent less. According to the startup association, the reasons for this are the weakening German economy and many other economic uncertainties.
Germany’s most popular location for startups remains the capital. With 468 start-ups, Berlin is far ahead of Munich. Only 187 new startups were created there. This now also applies again with regard to the number of inhabitants – here Munich moved into first place last year. But both lost. Berlin is faced with a decline of 7 percent and Munich even with a decline of 13 percent. “The founding engine in the two hotspots is stuttering,” emphasized the association. In third-placed Hamburg, however, the number rose by 10 percent to 158. Together, the three major cities account for a third of all German start-ups. But their share has been falling continuously since 2019.
According to the startup association, potential lies dormant in smaller regions. Area states such as Baden-Württemberg, Lower Saxony and Saxony would have recorded broad growth in 2023. The dynamics of start-up locations with strong research interests such as Darmstadt, Karlsruhe and Heidelberg are striking. Innovative startups are increasingly emerging around German universities that quickly bring scientific breakthroughs into business practice. Further strengthening this development is particularly important in view of Germany’s role as a deep tech location.
Only the software and energy industries are growing
The decline in new start-ups can be seen in almost all leading industries, with the food and e-commerce sectors being particularly affected by the weak consumer climate. Only in the software area was there an increase of 21 percent compared to the previous year. Companies and customers were apparently hoping for digitalization boosts and efficiency gains here.
Outside the top 10, the energy sector grew by a whopping 69 percent – despite a complex and highly regulated market, as the startup association notes. He also criticizes the difficult financing environment in Germany and would like to develop a stronger entrepreneurial and entrepreneurial spirit here.