2021, in the midst of the pandemic, is considered a boom year for the start-up industry. Digitization was very popular. But the situation has changed fundamentally. Investors are holding back.
Rising interest rates and risk-averse financiers continue to plague German start-ups. In a survey by the digital association Bitkom, around eight out of ten start-ups stated that investors had become significantly more cautious due to the weak economy. As a result, a good 70 percent will have capital requirements in the next 24 months – on average it is about 2.3 million euros, the association announced on Monday in Berlin. That is a drop of almost a third compared to the previous year with 3.3 million euros
According to the survey of 203 tech companies, only 17 percent of start-ups with capital requirements have secured financing for the next two years, more than three quarters (79 percent) are still looking. 14 percent of them consider it unlikely that they could raise the money they need.
Prefer to go abroad?
A lack of venture capital also remains a problem from the point of view of the start-up scene. Almost a third (32 percent) of founders believe that there is enough venture capital in Germany. Around a third (34 percent) are also considering going abroad with their own start-up because there is not enough capital in Germany. An IPO in Germany, on the other hand, is not an option for the majority.
“Many start-ups have recently had to put the brakes on costs and increase their profitability, which means that the average capital requirement has fallen,” said Niklas Veltkamp, a member of the Bitkom management board. The reluctance of investors should not slow down the growth and expansion of German start-ups. Politicians must create the conditions so that new investors such as pension funds or insurance companies can invest more in start-ups.
After a boom year in 2021, when the local start-up industry benefited from a digitization push during the pandemic and risk-taking investors, the market had turned around in 2022. In view of the war in Ukraine, the weak economy and rising interest rates, investors have recently been reluctant to inject money. The start-up industry is regarded as an innovation driver for the economy. In Germany, however, there is a lack of venture capital, especially for larger financing rounds. (dpa)