19 INTERNATIONAL TECH HUBS SECOND EDITION | BDO LLP
GERMAN NATIONAL AND STATE AUTHORITIES HAVE BEEN WORKING HARD OVER THE LAST 15 YEARS TO PROMOTE TECH INNOVATION AND IN PARTICULAR TO SUPPORT THE DEVELOPMENT OF IDEAS GENERATED IN UNIVERSITIES INTO MARKETABLE PRODUCTS.
THE INVESTOR ANGLE From an investment perspective – specifically a venture capital perspective – at first sight the ecosystem may look complex given the size of the country, the geographic spread of networks and both multiple agencies and hubs. Ecommerce was the early beneficiary of VC funding. Historically known as being home to traditional manufacturing, Germany is now seen as a growing force in 4.0 manufacturing (digital manufacturing), whilst it has emerged as the next European Fintech powerhouse. VC investments in Germany are flourishing and the market is highly dynamic. In 2019, the VC market saw €6.7 billion of funds invested up 45% y-on-y. This was an all-time high and the second highest volume in Europe: circa 570 start-ups and young companies were financed. Similar to the UK, domestic capital has diminished as a percentage of overall investment. This is because domestic VCs tend to lead on earlier rounds. International venture capital firms tend to hold out for businesses with a significant potential and invest later. It is larger rounds, which are more likely to be led by international investors (US in particular).These rounds have been a key factor in the recent growth in the overall amount of VC funding in Germany.
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