The latest figures from the KfW Venture Capital Dashboard reveal an impressive trend: German start-ups specialising in artificial intelligence (AI) raised a total of EUR 568 million in the second quarter of 2024. This sum marks the highest value in almost two years and highlights the growing importance of AI technologies in the German economy.
Large deals are driving growth
The impressive growth in AI start-ups was largely driven by a small number of very large financing rounds. One outstanding example is the Cologne-based online translation service DeepL, which alone received more than 250 million euros from investors. These large deals are not only a sign of confidence in the companies concerned, but also of the potential of AI technology as a whole.
Comparison with the international market
Although German start-ups have raised a considerable amount of money, an international comparison shows that there is still some catching up to do. In the same period, French startups achieved investments of 2.1 billion euros, while British and American startups are far ahead with 5.1 and 41.4 billion euros respectively. These figures make it clear that the German market is growing, but that greater efforts are still needed on a global scale in order to remain competitive.
Increase in domestic investment
One positive sign is the increasing participation of German investors. While 26% of capital came from domestic sources in the previous quarter, this quarter it was already 39%. This indicates that local investor interest in domestic AI start-ups is increasing and that the AI industry is becoming more firmly anchored in the national economic landscape.
Outlook and challenges
The future looks promising for German AI start-ups, but there are some challenges to overcome. The number of small deals under 1 million euros has decreased, which could indicate a slowdown in start-up momentum. Targeted support measures and a strengthening of the ecosystem are required here in order to maintain a diverse and robust start-up landscape.
Conclusion
The second quarter of 2024 has shown that focussing on AI is not only a strategic decision, but also pays off financially. With continued support and strategic investment, Germany can further strengthen its position in this crucial technology area and realise the full potential of artificial intelligence.
The KfW Venture Capital Dashboard
In the dashboard on the German venture capital market, KfW Research explains the developments on the market for venture capital in Germany on a quarterly basis. The focus is on investment activity in the number and volume of VC deals with German start-ups by, for example, financing phase, investor origin or technology sector, exit activity and market comparison with important international benchmarks. A look at the development of venture debt transactions rounds off the overview.
