Start-up company growth resumes in Germany

After the terrible year for founders in 2022, significantly more start-ups have emerged in Germany. In the first half of 2023, the number of start-ups rose by 16 percent compared to the second half of 2022 to almost 1,300, according to a study published in Berlin by the Federal Association of German Startups.

The capital in particular has come back after the slump last year with 40 percent more start-ups (262). Berlin felt the harsh environment for start-ups in 2022 with difficult financing conditions. Hamburg grew by a similar percentage with 90 start-ups. In Munich, on the other hand, the number of start-ups grew only slightly by two percent to 95.

However, the Bavarian metropolis remained at the top in relation to the number of inhabitants: In Munich there were 12.6 new start-ups per 100,000 people in the twelve months from July 2022 to June 2023, slightly more than in Berlin (12.3 ).

Berlin's Senator for Economic Affairs, Franziska Giffey (SPD), was optimistic that the capital would once again be ahead in terms of start-ups per inhabitant. The 40 percent increase in start-ups shows that "our ecosystem offers good conditions for start-ups". "Today, Berlin, together with London, is the most popular start-up metropolis in Europe," said Giffey. "Half of all investments in Germany in this area go to Berlin."

The start-up association assessed strong start-up figures in spring and June as a return to the upward trend of recent years in Germany. "After the slump in start-ups in 2022, this is an important signal for the economic and innovative strength of our country," said CEO Christian Miele.

German start-ups had experienced a long boom and in 2021 recorded record levels of investor financing. In the pandemic, digitization got a boost - whether in financial transactions, food deliveries or online shopping. But with the war in Ukraine, rising interest rates and uncertainty in the economy, the market had turned: Investors held back, start-ups cut jobs in droves.

Karlsruhe, Darmstadt and Heidelberg among the top five
According to the startup association, the start-up scene also went downhill - from almost 3200 in the record year 2021 to 2619 in 2022. With almost 1300 start-ups in the first half of 2023, the number is still at a comparatively low level.

It is remarkable that in the ranking of start-ups per capita, Karlsruhe, Darmstadt and Heidelberg are among the top five as three research-related locations. This shows the potential beyond start-up hotspots such as Berlin and Munich. "In order to make better use of our strength in research, we have to make the topic of entrepreneurship more prominent in universities and lower the legal and bureaucratic hurdles for spin-offs," said Miele. "If that succeeds, we will see many more start-ups founded at German universities."

Translated and reworded from original article in Zeit Online