Decline in start-ups in Germany in 2023

Marc Nemitz Marc Nemitz | 15.01.2024

Germany's startup landscape will see a slight decline of 5% in 2023. However, the software sector shows a remarkable increase of 21%.

Berlin - The latest figures on start-up activity in Germany in 2023 show a slight decline of just under 5% compared to the previous year. This corresponds to the level of 2019 before the coronavirus pandemic. The results are based on the report"Next Generation - Startup New Foundations in Germany" by the Startup Association and Startupdetector, which provides a detailed analysis of new startups in Germany.

Decline in various sectors, software sector a ray of hope

Start-up activity is declining in almost all sectors, with the eCommerce sector (-18%) and the food sector (-16%) being particularly affected. What is striking, however, is that the software sector recorded an increase of 21%, which indicates a sustained demand for technological innovations.

Regional shifts and hotspots

Berlin has once again overtaken Munich as the city with the most start-ups, although both cities have recorded a decline of -7% and -13% respectively. Interestingly, start-up activity is increasingly shifting to regions outside the traditional hotspots. The share of start-ups from Berlin, Munich and Hamburg has fallen from 41% to 33% since 2019, while smaller locations are gaining in importance.

It is impressive that almost 2,500 start-ups were founded in Germany despite global crises and increasing uncertainty.

Magdalena Oehl, Deputy Chairwoman of the Startup Association

The importance of breadth in startup ecosystems

The report underlines the importance of broad-based ecosystems. Only in six districts were at least 50 startups founded in 2023, but these represent 40% of all startups. This emphasizes the need for a diverse and broad start-up dynamic in a region. The three largest cities - Berlin, Munich and Hamburg - remain key players in the German startup ecosystem, even though their share of startups has fallen from 41% in 2019 to 33% in 2023. Berlin retains the lead per capita, followed by Munich and Hamburg.

This focus on clear hotspots may provide informative insights, but leaves out important university start-up centers. Constance in the border triangle, connected to the Lake Constance district, has always been considered a flourishing region. It is almost always ranked in the top 5 in the Future Atlas. Cities such as Tübingen, with its strong medical focus, and the closely neighboring Giessen and Marburg in Hesse, with their renowned universities, are also neglected. These regions, despite their population of less than 150,000, make a decisive contribution to Germany's lively and strong startup scene, as do many others.

Conclusion

The current figures show a slight decline in start-up activity in Germany in 2023. The established hotspots in particular are showing a certain decline, while smaller locations are gaining in importance. The diversity and breadth of the start-up ecosystems are proving to be decisive in strengthening start-up activity. However, the positive developments in the software sector give hope that technological innovations will continue to contribute to economic development.


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