Study shows significant increase in VC funding in the DACH region 2023

Study: VC financing in DACH start-ups stabilizes in 2023. Berlin with 5 new unicorns. Successful sectors: AI, travel, foodtech, healthcare.

Berlin - According to a recent study by global venture capital firm NGP Capital, DACH-based startups are still attracting significant investment despite slowing growth in VC funding as competition for dominance in generative AI and deep tech intensifies.

NGP Capital announced the results of its research into the investment landscape in the DACH startup ecosystem on Wednesday, July 26, 2023. The analysis included data from over 3905 companies and 5644 funding rounds from Germany, Switzerland, Austria and Liechtenstein and revealed the latest trends in startup funding, deals and exits in the region.

In a time of rapid technological advances and entrepreneurial enthusiasm, the DACH region has established itself as a powerhouse in the European startup ecosystem.

Christian Noske, Partner NGP Capital

NGP Capital's research shows encouraging signs of stability this year (2023) as VC funding in the DACH region returns to pre-2021 'fundraising bubble' levels. In Germany, venture funding reached USD 2.9 billion in the second quarter of 2023, which is only 25% less than funding in the first quarter of 2022, when Russia began its invasion of Ukraine and the global economic crisis impacted VC funding.

5 Berlin unicorns

Despite the global reset in venture funding, ten DACH-based companies have joined the unicorn club since 2022, with two companies reaching the $1 billion valuation in 2023. Interestingly, five of these new unicorns are based in Berlin, while the success of Scandit, a portfolio company of NGP Capital, demonstrates the strength of the University of Zurich's spin-out and deep tech ecosystem.

The research also revealed the following key findings on investment trends in DACH startups:

• DACH-based generative AI startups received more funding in the second quarter of 2023 (USD 248 million) than in the whole of 2022 (USD 210 million).
• Funding for German startups is stabilizing. After a decline of 54% in start-up financing in the first quarter of 2023 compared to the first quarter of 2022, there was a smaller decline of 41% in the second quarter of 2023 compared to the second quarter of 2022.
• Funding in Germany fell less sharply between the first half of 2022 and the same period in 2023 compared to other European markets of a similar size. Germany saw a decline of 37%, while France and the UK saw declines of 54% and 40% respectively.
• DACH-based startups in the travel, food and healthcare technology sectors experienced prosperous times in the first half of 2023 Funding in the travel sector (+52%), food technology (+38%) and life sciences (+5%) saw significant increases compared to the first half of 2022.
• Germany continues to dominate VC funding in the DACH region, with 72.0% of total investments flowing into German startups, compared to 23.4% in Switzerland, 4.0% in Austria and 0.6% in Liechtenstein.

NGP Capital has been tracking the development of the DACH ecosystem for over a decade and has backed leading companies such as GetYourGuide, Scandit, ANYbotics, Babbel, EGYM and many others. NGP Capital's "DACH Startups Decoded" report is based on the company's proprietary data and analytics platform Q, which combines data from hundreds of different sources. With $1.6 billion in assets, NGP Capital invests globally in early-stage Series A and above companies in the enterprise software, industrial technology, cybersecurity and infrastructure sectors. The full study and further information can be found on the NGP Capital website.