Geopolitical uncertainties, the turnaround in interest rates and unclear economic prospects are causing a lot of uncertainty. Investors therefore take a closer look at the companies in which they invest. The stocks of tech companies in particular are collapsing as their business models are considered interest-bearing.
After a record year, German startups have to cope with a slump in cash injections from investors. The growth companies collected a good 6 billion euros in venture capital in the first half of the year - 20 percent less than in the same period last year (7.6 billion). However, according to a study published by the auditing and consulting firm EY, local startups still experienced the second-best first half of all time.
The number of financing rounds fell by 7 percent to 549, but remained well above the level of the years before 2021. "There is still a lot of liquidity in the market, but investors are taking a closer look at where they are investing," said EY partner Thomas Prüver. Geopolitical uncertainties, the turnaround in interest rates and unclear economic prospects caused a great deal of uncertainty, which may not yet be fully reflected in the figures for the first half of the year.
Startups are dependent on investors such as venture capital funds or corporations because they initially do not make any profits. During the pandemic, growth companies benefited from the fact that digitization got a boost - for example in online shopping, financial transactions or food deliveries. In 2021, according to EY, local startups collected a record sum of 17.4 billion euros in venture capital. There were also some very large injections of money, for example for the delivery service Gorillas, the software provider Celonis and the smartphone bank N26. But with the Ukraine war and rising interest rates, the market has turned.
In particular, shares in tech companies collapsed as their business models are considered interest-bearing. And investors became more cautious about startup financing. It was only announced on Monday that the overall rating of the Swedish payment service Klarna had fallen by 85 percent. Some startups have recently cut jobs in rows because of the more difficult conditions.
Most of the capital for German startups flowed to Berlin again in the first half of this year: According to EY, more than every second euro invested ends up in the capital (3.25 billion). Bavaria came second with 1.16 billion euros, but the total was halved compared to the same period last year. Hesse and Hamburg, among others, have increased significantly, benefiting from large rounds of financing.
