German start-up investments rise significantly in Q3

Banking & Financial Services
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Wolfram Schweickhardt Spokesman | KfW Group

In the third quarter of 2024, German start-ups experienced a resurgence in capital investment, with more than EUR 2 billion invested by both domestic and international providers. This marks the first time in over a year that such a level has been reached. The investment volume, totaling EUR 2.5 billion, represents a 50% increase from the previous quarter and is the highest since mid-2022.

The number of financing rounds also saw significant growth, increasing by 40% to reach 280 compared to the previous quarter. Overall, there were 885 transactions in which venture capital was provided to start-ups during the first three quarters of this year. Although this figure is slightly lower than the 922 deals recorded during the same period in 2023, the total investment volume for this year is moderately higher.

According to findings from the KfW Venture Capital Dashboard published by KfW Research, US investors showed particular interest in German start-ups during this period, followed closely by German investors.

Start-ups within the health sector accounted for the largest share of deals in Germany's venture capital market during Q3 of 2024. A total of 42 financing rounds were completed within this sector, which includes young businesses developing digital healthcare applications and new medicines or working on biotechnology innovations.

The energy sector emerged as another key area with significant activity, securing 35 deals and capturing a market share of 13%. This sector includes start-ups focused on sustainable energy generation as well as recycling and waste treatment solutions.

Compared to other major markets like those in the US, France, and UK; Germany was unique in achieving growth in transaction volume from one quarter to another despite lagging behind these countries when considering absolute figures.

Dr Steffen Viete from KfW Research commented: “Going into the second half of the year, the German VC market sent out a positive signal that gave hope for a strong conclusion to the year in coming quarters.”

He further noted: “To be sure—a bright VC summer should not yet be overrated—but it’s clear that conditions have improved following ECB’s further key interest rate cuts alongside noticeable initiation by Fed regarding their own reduction cycle back September.”

For additional details on these developments or access related data sets visit current dashboard available through KFW research channels online today!