Venture capital investments of the first half of 2015 have already reached the size of investments in the full year 2014, says the “Start-up-Barometer Deutschland” from Ernst & Young. Financing is still a major concern for founders.
In the first six months of 2015, 1.9 billion Euro have been invested in German start-ups. This is three times as much as in the whole year of 2013 and already the size of what has been invested in the whole year of 2014. In Europe, Venture Capital is rising as well. During the first six months of this year, 6.5 billion Euro have been invested. In 2014, 7.57 billion Euro have been invested.
Berlin is, due to a rise in the number of deals as well as in the size of total investments, surpassing London. In the first half of 2015, 81 deals with a total size of 1.45 billion Euro have been closed in Berlin. In London, 1.07 billion Euro have been invested in 82 financing rounds. Munich and Hamburg are among the top six European cities ranked by risk capital investments.
The main concern for start-ups is their financing. 38 percent of participants state it as such in this year’s survey, compared to 44 percent in 2014. The major source of financing for start-ups is their founder’s investment including the one of business angels and their families (61%). 43 percent finance themselves with their cash flow. Public sponsorships are used mainly at early stages, venture capital mainly in later stages of a start-up’s life. Banks, crowdfunding and media for equity play a minor role in financing. Only about half of the start-ups are expecting another round of financing within the next two years. Most of them below two million Euro.
The legal environment is the second most important concern for founders. Being stated as the main concern by 24 percent in 2014, the number has increased to 33 percent by now. Only, three out of ten participation evaluate the total environment for start-ups in Germany as good. Berlin is getting the best evaluations with 43 percent of participants stating that the environment is good. Of importance regarding the environment are the availability of qualified personnel (62%), affordable office space (37%) and infrastructure (31%). The situation can be improved, among many other policies, by an easier access to loans (73%).
Most founders are not concerned with exit strategies but rather with growing their ventures. 29 percent are concerned with it. Most of them (56%) want to sell their business completely, 44 percent would also sell it partially. For 17 percent, an IPO is an option.
While only every third start-up is internationally operating by now, every second founder expects that his start-up will expand internationally within the next five years. In the same time frame, every fourth founder expects his start-up to be market leader.
Ernst & Young has asked in their study “Start-up-Barometer Deutschland” 181 start-ups from Germany. The founders of ventures founded within the last ten years have been asked. 38 percent of firms participating in the survey are not older than three years.
Please find the full study here: