The financing crisis among German start-ups has worsened significantly. Young companies raised around six billion euros in venture capital in 2023, 39 percent less than in the previous year (9.9 billion euros), shows a study by the auditing and consulting company EY. It was the second year in a row with a sharp decline. Compared to the record year 2021 (almost 17.4 billion euros), investments fell by almost two thirds (65 percent).
EY partner Thomas Prüver pointed to high inflation, increased interest rates, the weak economy and uncertainty due to wars. “In order to obtain fresh capital even in these difficult times, good ideas alone are no longer enough for start-ups.” From the perspective of investors, what is now needed are solid business models and the prospect of profitability.
The tough times for start-ups are also reflected in the financing rounds. According to EY, their number fell by 15 percent in 2023 compared to the previous year to 861 deals. In addition, there were only eight large deals worth more than 100 million euros – there were 19 in 2022 and 33 in 2021. Prüver expects job losses in the industry to continue.
