German startups attract record investment in 2025

Investments in startups are increasing significantly again in Germany. This is according to a study on the use of venture capital published on Monday by the federal development bank KfW. According to the study, German startups raised fresh funds totaling €2.4 billion in the second quarter of 2025, 45 percent more than in the previous quarter.

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According to KfW Research, the total transaction volume in the first half of the year was just under four billion euros. Investments in startups increased for the third consecutive quarter. In the second quarter of 2025, there were 208 financing rounds for startups in Germany, 98 of which had a volume of one million euros or more.

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"This development appears particularly encouraging given that the general conditions in the first half of 2025 were rather challenging," explained KfW Chief Economist Dirk Schumacher. "In particular, the turmoil in the capital markets as a result of US tariff policy weighed on the investment environment," he pointed out.

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Two more German startups joined the so-called "League of Unicorns" at the beginning of May. This refers to companies valued by investors at at least one billion dollars.

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KfW Research reports that investors from abroad showed strong interest in German start-ups. Between 2020 and 2024, foreign venture capitalists invested around 37 billion euros in young German companies. At the same time, EUR 21 billion flowed from German investors to start-ups abroad, resulting in a net capital inflow of EUR 16 billion in this segment.

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About a quarter of the funds raised by German start-ups between 2020 and 2024 came from domestic investors, according to KfW Research. A further 26% came from venture capitalists from other European countries. 31% of the capital came from the USA and 10% from Asia. This was above average in comparison to the European market as a whole.

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“The high inflows to the German venture capital market are primarily an expression of the quality and the innovation and growth potential that foreign investors attribute to German start-ups,” explained KfW venture capital expert Steffen Viete. Nevertheless, "the promotion of the German market for venture capital remains an important economic policy task".