German startups have already attracted significantly more investment this year than they did in 2025. Around €8 billion flowed into young companies between January and September, €500 million more than during the same period last year, according to the Startup Association, which released the figures on Monday. “This shows what is possible in Germany,” said Verena Pausder, chairwoman of the Startup Association. “But when it comes to growth capital, and especially large funding rounds, we are still lagging behind internationally.”
The largest funding rounds were recorded primarily in the defence and deep-tech sectors, according to the association’s latest Startup Monitor. Deep-tech startups are defined as companies that bring fundamentally new technologies to market and require a long development period. According to the report, around 10 percent of startups fall into this category.
At the same time, ten German startups had reached unicorn status by September, meaning they had achieved a valuation of more than US$1 billion. The association described this as a “record.” “There are as many as there have been since 2021, bringing the total number to 39,” the association said.
However, according to the association’s study, the majority of startups planning to go public would prefer to do so in the United States. Some 61.9 percent said they would choose a US stock exchange, “because liquidity, valuation levels and the investor base for technology companies are significantly larger there.” “This is not particularly flattering for the European capital market,” the association said.
Only 27 percent of the startups surveyed said they wanted to list on a German stock exchange. At the same time, the association said this showed that “the location has not been written off.” It called for further progress on the European Capital Markets Union. The Capital Markets Union is an economic policy initiative supported by Germany and others within the EU that aims to harmonise capital-market rules across the 27 EU member states and make cross-border transactions and investments easier.
Artificial intelligence is playing an increasingly important role in young companies, according to the study. For 53 percent of startups, AI is now at the centre of their product, the association said. Last year, the figure was 45 percent, compared with 39 percent in 2024.
“Startups are therefore pioneers of technology and, at the same time, key digitalisation partners for small and medium-sized businesses and industry,” the association said. At the same time, the Startup Association recorded a decline in the share of startups working with established companies.
The increasing use of AI is also one factor behind another decline in the average number of employees at startups. According to the study, startups currently have an average of 15.3 employees, down from 15.8 the previous year.
“Software startups in particular could use AI coding tools to accelerate product development enormously and therefore require fewer personnel resources,” the association said. Despite this, the association emphasised that startups remained “job engines.” According to the study, 83 percent of startups plan to hire new employees over the next 12 months.
“Germany is founding companies again – across the board and on a strong technological foundation,” Pausder said. She pointed to the success of the Bavarian startup Isar Aerospace as an example. Its Spectrum launch vehicle completed a test flight in early September and reached Earth orbit. However, Pausder said an economic environment that supports this development was still lacking.
“What is needed now is to implement the federal government’s startup and scaleup strategy, strengthen financing and, with EU Inc., finally make founding and scaling companies in Europe fundamentally easier,” she said.
With “EU Inc.”, the European Commission plans to introduce a new company structure that would allow startups to be registered in all 27 EU member states within a short period of time. EU Commissioner for Startups Ekaterina Zaharieva appealed to German Chancellor Friedrich Merz (CDU) and the other European heads of government in Monday’s edition of Handelsblatt. “If you want to keep talent here and help them grow from Europe and become global, we need to get EU Inc. off the ground,” Zaharieva said.
For the annual Startup Monitor, the association said it collected around 1,800 datasets from German startups between mid-June and the end of August. The study also incorporates investment and founding data from other startup databases, as well as comparative figures from the ifo Institute.
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