Capital crunch hampers growth for German startups, according to Bitkom study
Germany is taking bold steps to address the lack of venture capital (VC) for tech startups and encourage them to grow domestically. The country's comprehensive approach involves creating favourable legal and financial frameworks, large-scale public-private funding initiatives, attracting foreign capital, and fostering innovation ecosystems through targeted regional and sector programs.
A significant move has been Bavaria's resolution enabling public and private foundations to invest up to 5% of their assets into VC. This change is expected to tap into a largely unused capital source, with venture capitalists praising it as a precedent-setting move that could spread across Germany and Europe [1].
The current German government coalition has pledged to double the size of the 'Win-initiative,' a flagship program aimed at mobilizing €12 billion of public and private capital for the startup ecosystem by 2030 [1]. This commitment reflects a broader policy push to stimulate more private investment in VC to support startups.
According to Germany's economic development bank KfW, VC investment in German startups reached €4 billion in the first half of 2025, marking a 45% increase year-on-year. Foreign investors, particularly from the USA, contributed heavily—€37 billion from 2020 to 2024—indicating increased international confidence in Germany's startup scene [2][4].
The federal Ministry for Economic Affairs and Energy selected Hamburg as one of ten locations to receive dedicated funding (over €50 million combined from federal, local foundations, and companies) to promote science-based startups, especially in deep tech fields such as green tech, AI, and new materials [3]. This "Startup Factories" program aims to create strong local support structures to foster innovation and entrepreneurship from research institutions.
Beyond traditional hubs like Berlin and Munich, regions such as Saxony are seeing rapid growth in startup formation, supported by more balanced, regional-focused policies and investments to broaden Germany’s innovation base [4].
However, despite these efforts, a survey by the digital association Bitkom on 152 tech startups from Germany reveals a challenging financing situation. Only 50% of startups consider it somewhat likely they will receive necessary financing, while 26% are considering moving abroad due to the current situation [5].
The survey findings suggest that the difficult financing situation compared to international standards has been a problem for many German startups for years. Only 24% of the startups believe they have sufficient funding for the next two years, with 81% of the startups noting that investors have become more cautious due to the economic situation [5].
Ralf Wintergerst, President of Bitkom, appreciates the current financing situation for German startups but believes more must be done. He emphasizes the need to make Germany attractive for foreign founders [6]. One such initiative is the Future Fund, an attempt by politicians to counteract the difficult financing situation for German startups [6].
The average capital requirement of startups over the next two years is around €2.5 million. While 45% of startups are considering a German stock exchange for an IPO, 40% are considering a foreign stock exchange. Interestingly, 53% of startups can fundamentally imagine taking an IPO, with 28% considering the USA [5].
In conclusion, while Germany is making strides in addressing the venture capital shortage, the challenging financing situation remains a concern for many startups. Efforts to attract foreign investment, create supportive ecosystems, and stimulate private investment are crucial to ensuring Germany's tech startups can thrive domestically.
Startups in Germany could benefit from education and self-development programs to improve their financial management skills, enabling them to secure necessary funds and boost their attractiveness to investors.
To further stimulate growth in technology startups, political initiatives such as the Future Fund could explore collaborations with institutions offering education and self-development resources, equipping startups with the necessary skills to navigate the complexities of the finance world.
