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

Study: VC funding in DACH startups stabilizes in 2023. Berlin with 5 new unicorns. Successful sectors: AI, travel, foodtech, health.

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

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 $2.9 billion in Q2 2023, which is only 25% less than funding in Q1 2022, when Russia began its invasion of Ukraine and the global economic crisis affected 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 insights into investment trends in DACH startups:

• DACH-based generative AI startups received more funding in Q2 2023 ($248 million) than in all of 2022 ($210 million).
• Funding for German startups stabilizes. After a 54% decline in startup funding in Q1 2023 compared to Q1 2022, there was a smaller decline of 41% in Q2 2023 compared to Q2 2022.
• Funding in Germany decreased less compared to other European markets of similar size between the first half of 2022 and the same period in 2023. Germany saw a 37% decline, while France and the UK saw declines of 54% and 40%, respectively.
• DACH-based startups in travel, food, and healthcare technology saw flourishing times in the first half of 2023. Funding in travel (+52%), food technology (+38%), and life sciences (+5%) saw significant increases compared to H1 2022.
• Germany continues to dominate VC funding in the DACH region, with 72.0% of total investments going to 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 enterprise software, industrial technology, cybersecurity and infrastructure. The full study and more information can be found on NGP Capital's website.