2025 Marked Impressive Leap in German Start-Ups

According to calculations from business consultants Ernst&Young, start-ups in Europe’s largest economy took in EUR 8.4 billion in venture capital investment in 2025. That was the third-largest sum ever and a clear indication that the sector is returning to the vitality of pre-corona years. 

Investment volume increased by nearly 20 percent despite the number of deals declining. The trend is clear: Investors in German start-ups are more likely to target their money than spray it around, as a number of headline-making nine-figure financing rounds attests.

That’s pumped further new energy into the scene. According to a report published by the German Startup Association in partnership with Startupdetector, 3,568 new start-ups were established in 2025.  That represented a 29 percent increase on the previous year and higher even that the previous record year of 2021 – previously considered an outlier as a result of the coronavirus pandemic. 

Start-up numbers were up in almost all federal states, with growth particularly robust in the states of Bavaria (46 percent year-on-year increase), North Rhine-Westphalia (33 percent increase) and Saxony (56 percent increase). Germany’s flourishing start-up scene witnessed strong growth in the AI, greentech and deeptech sectors, where Berlin and Munich have emerged as leading hubs. 

Berlin remains the country’s per capita start-up leader, with 619 new start-ups (25 percent increase) being created in the German capital in 2025 – equivalent to 16.8 start-ups per 100,000 inhabitants. Munich leads the city ranking with 19.3 start ups per 100,000 inhabitants. Research-oriented cities – including Aachen, Potsdam, Darmstadt, and Karlsruhe – with excellent academic and innovation cluster infrastructure also number among the country’s top start-up locations.   

More than one in four of all new start-ups in the past year use AI as a key part of their business model activities (compared to 18.3 percent in 2024). The software sector recorded the largest increase with 853 new start-ups, followed by the medicine sector with 428 new companies. 

Start-ups that stood out in 2025 include defense tech and AI firm Helsing which secured EUR 600 million in series D financing. Artificial intelligence start-up Black Forest Labs also drew attention with a USD 300 million funding round, with AMBOSS in the health sector raising EUR 240 million in new investment.