The venture capital market in Germany is experiencing a shift in focus, with climate technology start-ups losing some of their previous momentum. According to KfW Research, these start-ups had been the leading segment in terms of investment volume last year, raising twice as much funding in 2024 compared to five years earlier. However, expectations for 2025 indicate a more moderate outlook.
Dr. Steffen Viete, a venture capital expert at KfW Research, noted that "for one thing, this could signal a degree of market saturation. For another, the economic environment has changed. Climate targets are competing more heavily with other priorities than just a few years ago. Start-ups that have this as a focus could therefore be facing greater challenges raising capital."
The findings come from a survey conducted among venture capital investors in Germany by KfW Research, the German Private Equity and Venture Capital Association (BVK), and the Deutsche Börse Venture Network.
In contrast to climate technologies, sectors such as cybersecurity and artificial intelligence are attracting significant attention from investors. The deal volume for cybersecurity was already 65% above its 2019 level in 2024, while artificial intelligence saw an increase of 127% over the same period.
Investors also anticipate growth potential in defence and dual-use technologies—goods that serve both military and civilian purposes—a sector that was not previously prominent among European venture capital interests.
Conversely, areas like mobility and logistics technologies, agri-food technologies, and online trade are expected to see lower growth rates. Dr. Viete remarked on the evolution of online trade: "For many years, start-ups that focused on online trade were one of the most important and dynamic areas for venture capital investment. But this area has moved into a mature phase in recent years. Although more than EUR 1 billion was invested here again in Germany in 2024, that was a 67 per cent decline from 2019."