With 1,825 companies surveyed, the German Startup Monitor is the most comprehensive survey of startup founders in Germany and is published annually by the Startup Association in cooperation with its partner and co-publisher PwC Germany. The first data on the assessment of the business situation and the investment situation is now available.
Despite some challenging developments, the German startup landscape is proving remarkably robust and adaptable. Although the startup business climate has fallen to its second-lowest level since the pandemic shock in 2020 with a current value of 38.1 points, founders remain optimistic.
Continuation of job growth at start-ups
What is particularly impressive is the ongoing increase in employment, which has not stalled despite adverse circumstances: the job engine of startups is not sputtering and many companies are continuing to hire. More than half of German startups created new jobs last year, while only 15% had to cut jobs. This underlines the resilience of the sector and the confidence of founders in the long-term prospects: despite a noticeable decline in investment in German startups, founders are not discouraged. The figures show that the majority of startups continue to focus on growth and are willing to hire talent. Even in the challenging Berlin ecosystem, which is more affected due to its financing and industry structure, job cuts are limited at 24%.
Overall economic situation is difficult
The current tense overall economic situation is also impacting sentiment in the startup ecosystem. The startup business climate determined in the German Startup Monitor continues to fall in line with the ifo business climate and is at its second-lowest level since the emergence of coronavirus in 2020.
The changed interest rate environment and inflation in particular pose special challenges for many startups. Although business expectations, i.e. the outlook for the future, have risen slightly, the bottom line is that the mood is characterized above all by great uncertainty: 65% of all startups are currently finding it difficult to assess future business development.
Uncertainty in the financing sector
One major source of this uncertainty is the financing sector. Investment in German start-ups has fallen significantly recently, but is still above the pre-coronavirus level of 2020. The current negative trend can be explained primarily by the lack of larger financing rounds: In 2023, there was still no financing round over 250 million euros – in the record year 2021 there were a total of 8, in 2022 still 4. The founders also rate the willingness to invest accordingly – almost half rate this as poor, only 15% rate the current willingness of business angels and VC funds to invest as good.
Adapting start-ups
In view of the great uncertainty and the tense economic situation, startups are adapting their strategies – profitability is currently more important than growth. They are also planning more cautiously: as already mentioned, one in three startups has reduced the number of new hires and adjusted their financing plans. Despite all the adversity, however, the startup job engine has not yet stuttered overall and many companies are still hiring.
Christian Miele (Chairman of the Startup Association):
“The overall economic situation is not leaving German startups unscathed. In view of a declining business climate and growing uncertainty, we need more focus on future topics in Germany in order to avert the innovation slump. Startups are the companies of the future and can drive the economic turnaround. The German government must give more priority to startup topics. This applies, for example, to the Future Financing Act, which German startups have been waiting for for a long time – it should now be passed quickly.”
The sneak peek of the German Startup Monitor 2023 is available here.
To the report:
This publication is an excerpt from the German Startup Monitor 2023, which will be published for the eleventh time in September 2023. It presents the assessment of the current and future business and investment situation as well as the strategies of the startups surveyed as part of the German Startup Monitor 2023.
With 1,825 companies surveyed, the German Startup Monitor is the most comprehensive start-up study in Germany and is published annually by the Startup Association in cooperation with its partner and co-publisher PwC Germany.
About the Startup Association
The Startup Association sees itself as the voice of startups in Germany: since its foundation in 2012, the association has represented the interests of startups in politics, business and the public. In its network, which now has over 1,200 members, the association also aims to create an exchange between startups, but also between startups and the established economy.
