German Startup Confidence Plummets to 2020 Levels Amid Economic Stagnation
Berlin (dpa) - The business climate among German startups has deteriorated to its lowest point as the onset of the COVID-19 pandemic in 2020, according to a new study by the German Startup Association. The slowdown in the German economy and reduced innovation investment from established companies are contributing to the downturn. The association notes the current situation mirrors the uncertainty experienced during the initial phase of the pandemic.
The Startup Climate Index fell to 31.7 points in 2024, down from 39 points the previous year, reaching a level comparable to that seen in 2020. This index, calculated similarly to the well-known ifo index, assesses both current conditions and future expectations.
The study reveals that nearly half of surveyed startups (49%) rate their current situation as merely satisfactory. A further 15% view it as unfavorable, while only 35% consider it good.despite thes concerns, a degree of optimism persists regarding future prospects. 52% of startups anticipate improved business conditions within the next six months.
The findings are based on the German startup Monitor, which surveyed 1,846 companies between June and August.
“Even as economic uncertainties put pressure on young companies, confidence in their own innovative strength and long-term growth potential remains strong,” stated Verena Pauster, chairwoman of the German Startup Association.
While access to funding from investors has recently shown advancement,Germany lags behind global competitors. Since the beginning of 2023, the USA has seen approximately four times the level of startup investment relative to its economic size compared to Germany. The UK and France have also attracted substantially more investment – three times and 1.5 times respectively.The association is urging the German federal government to implement a more proactive and supportive policy for startups.
Despite the challenging climate, the number of German “unicorn” startups - companies valued at over one billion euros – continues to grow, reaching 31, fueled in part by the boom in artificial intelligence. This represents a significant increase from 11 in 2019 and 28 in 2024. Currently, the most valuable German startups include AI translation service DeepL, neobroker Trade republic, and defence technology company Helsing.
