Best Chances to Raise Money in Berlin
Capital in the capital – the annual study by EY shows that Berlin saw more investment deals than ever in 2021.
The new startup barometer by Ernst & Young reveals an array of facts and figures concerning funding and venture capital in Germany. In total there were 1160 financing rounds in 2021 worth approximately €17.4 billion altogether. That’s 56% more than in the previous year. 60% of this capital, €10.5 billion, flowed into Berlin startups. So startups in Berlin raised more money than anywhere else in Germany last year.
This comes as no great surprise, since in the last couple of decades Berlin has become one of the world’s hotspots for the startup scene. The website startupsandplaces.com even put Berlin ahead of London to first place in their ranking of the most attractive startup locations in Europe.
For founders, two aspects are essential to foster the growth of their startup, getting funded and finding the right team. We already reported why international talents are attracted to Berlin, and Dr. Thomas Prüver, managing partner at EY, confirms that, “The diversity, the languages, the art scene, the alternative culture, it all sets the city apart”. Now let’s look at the money side.
It wasn’t just the amount of investment deals that went through the roof. It was the size of them. Judging by the deals recorded in the EY study (which is based on media coverage as well as the figures from Crunchbase), the average investment amount per financing round in Berlin was an incredible €21 million. No wonder founders like it here.
33 of the Berlin deals in 2021 weighed in at over €100 million, and eight at over €500 million. The highest round at €861 million went to Berlin-based food delivery startup Gorillas (that being just one of two rounds they did in 2021). If you look at the entire country, 7 of the top ten deals in Germany took place in Berlin.
These days, it is not entirely necessary for budding unicorns to have flashy office space in order to impress investors (although Berlin has a lot of attractive new premises to offer). Due to the pandemic, financiers are used to video calls too. Of course, for many young companies, the covid pandemic didn’t make life easier. However, the Berlin administration did pay out "Corona aid for startups", with more than 125 million Euros going to around 180 startups in 2020 and 2021.
Capital for Clusters
E-commerce
The sector that was invested in most heavily in Berlin in 2021 comprises e-commerce solutions, with almost 3.4 billion Euros flowing to 80 young companies active in these fields. Over 90 percent of the total amount invested in the e-commerce sector in Germany went to startups in the capital.
Fintech & Insurtech
Coming in a close second in terms of number of deals as well as amount invested were startups involved in the shifting of money. The field of payments and transactions is developing rapidly. 85% of fintech deals in Germany were made in Berlin, with 3,216 million Euros being invested in 76 startups. With more than four hundred fintech companies all told, Berlin is facilitating transactions all over the world.
Mobility & Transport
One of the clusters Berlin actively promotes is transport & mobility. Famously, Elon Musk placed his Tesla Gigafactory in the Berlin environs. Be it road or rail, a wide range of companies in Berlin works in close cooperation with first-class research institutes on new technologies, concepts and system solutions for environmentally friendly, efficient and safe passenger and commercial traffic. In 2021, mobility startups in Berlin were able to raise almost 800 million Euros investment capital, with Berlin start-ups enjoying the most financing rounds of all German cities. Sustainable mobility is electric, and Berlin is also leading the way in energy storage systems and battery-related business.
Health and Digital Health
Another important economic cluster for Berlin has always been health. In 2021 in the health sector, more capital flowed to Berlin startups than anywhere else in Germany. In 57 financing rounds they received a total of 519 million Euros. A recent healthcare industry study puts Berlin in the top 3 locations worldwide. Breakthrough technologies are being developed here, many in conjunction with the universities and the famous Charité, for example Artifical Intelligence applications in the field of digital health. Biotech is big in Berlin, especially in Berlin Buch, and overall the German capital is where the future of medicine is being created.
There was a time when it was perfectly acceptable for a mayor of the city to say that Berlin is “poor, but sexy”. These days are long past, and walking around the streets of districts such as Kreuzberg or Prenzlauer Berg one can feel the startup vibe. Berlin is the European hotspot for founders and a center of innovation.
Text: Olaf Bryan Wielk, ideenmanufaktur
Header image: © DisobeyArt-AdobeStock
