KfW Research: German start-ups are raising more capital again

• In the third quarter of 2024, investment volume was at the highest level since mid-2022
• Young health sector enterprises enterprises in particular are finding investors
• Positive outlook for the coming quarter

In the third quarter of 2024, German and international providers of capital invested more than EUR 2 billion in German start-ups again for the first time in more than a year. At EUR 2.5 billion, the volume was 50% higher than in the preceding quarter – and the highest since the second quarter of 2022.

The number of financing rounds also grew significantly by 40% to 280 on the previous quarter. Overall, there were 885 transactions in the first three quarters in which investors provided start-ups with venture capital. That means the number of deals was slightly lower than the 922 concluded in the first three quarters of 2023. But total volume this year was moderately higher than in the comparison period of 2023. Investors from the US showed a particularly keen interest in German start-ups in the third quarter of 2024, followed by German investors.

These are the findings of the KfW Venture Capital Dashboard, in which KfW Research publishes quarterly figures on the German venture capital market.

With a total of 42 completed financing rounds, start-ups in the health sector accounted for the largest share of deals in the German VC market in the third quarter of 2024. This sector comprises young businesses in the life sciences sector that develop digital healthcare applications and new medicines and work on innovations with living organisms in the field of biotechnology.

The second most important sector was energy, with 35 deals and a market share of 13%. It comprises start-ups that work on sustainable and more efficient energy generation and recycling and waste treatment solutions.

Against the important comparison markets US, France and the UK, the German VC market was the only one that succeeded in growing its transaction volume in the third quarter on the previous quarter. In an international comparison, however, the German VC market lags behind in absolute figures.

“Going into the second half of the year, the German VC market sent out a positive signal that gave hope for a strong conclusion to the year in the coming quarter”,

said Dr Steffen Viete, venture capital expert at KfW Research.

“To be sure, a bright VC summer in Germany should not yet be overrated. But the VC market environment has clearly improved with the ECB’s further key interest rate cuts and the Fed’s very noticeable initiation of the interest rate reduction cycle in the US in September.”

The current KfW Venture Capital Dashboard by KfW Research can be found at Venture capital market in Germany | KfW