Economic crisis hits German start-ups: Sentiment at lowest level since Corona
Berlin. The mood among German startups has fallen to its lowest level since the 2020 coronavirus crisis. The stagnating economy is making business more difficult in the industry, while established companies are investing less in innovation, according to a new study by the Startup Association.
“Similar to the first year of the pandemic, startups are suffering from uncertainty and the associated reluctance to enter the market.”
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The business climate among start-ups fell from 39 points in 2024 to 31.7 points recently, a level comparable to 2020. The business climate is calculated like the well-known Ifo index, consisting of an assessment of the current situation and the outlook.
Almost half of those surveyed rated their situation as merely satisfactory, another 15 percent rated it poor, and only 35 percent rated it as good. However, confidence prevails regarding the outlook. A good half (52 percent) expect improved business within six months, according to the association. The study is based on the German Startup Monitor, for which 1,846 companies were surveyed between June and August.
“Even though economic uncertainties are increasing the pressure on young companies, confidence in their own innovative strength and long-term growth prospects remains high,” says Verena Pausder, chairwoman of the Startup Association.
Although access to capital from investors has recently improved somewhat, Germany lags behind globally, according to the association. Since the beginning of 2023, the US has invested around four times as much in startups as Germany, relative to its economic power. In the UK, the figure is three times as much, and in France, one and a half times as much. The association calls for a decisive policy for startups from the German government.
Despite financial worries in the startup industry, a few startups are managing to achieve a valuation of at least one billion euros. The number of such companies ("unicorns") has risen to 31, thanks in part to the boom in artificial intelligence.
According to the association, in 2019 there were only 11 start-ups with a billion-dollar valuation, but by 2024 there were 28. Among the most valuable German start-ups are the AI translation service DeepL, the neobroker Trade Republic and the defense company Helsing.
RND/dpa
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