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From the fight against uncertainty to a possible turnaround: More startups in the first half of 2023
The past year has been a touchstone for many young companies in Germany, marked by wars, economic instability and rising interest rates. But now there are signs of a possible turnaround as startup formation picks up steam in the first half of 2023
According to a study by the German Startups Association in collaboration with industry service Startupdetector, 16 percent more companies found their way into the business world compared to the previous six months, representing nearly 1,300 startups.
The once-booming German startup scene experienced a peak period in 2021, with record levels of funding from investors. The COVID-19 pandemic acted as a catalyst for digitization in areas such as finance, food delivery and online shopping. However, the environment changed with the Russian war on Ukraine and rising interest rates and uncertainty in the economy. Investors pulled back, and many startups were forced to cut jobs.
The number of start-ups also showed a downward trend. After the record year of 2021 with almost 3,200 startups, this number dropped to 2619 in 2022. Nevertheless, the first half of 2023 shows a positive development, even if the total number of startups remains comparatively low at just under 1,300.
The tourism, mobility, food and software sectors in particular saw an increase in startups compared to previous periods. In contrast, there was less startup activity in the blockchain and cryptocurrencies sectors.
The cities of Berlin and Hamburg stood out in particular. Berlin saw a 40 percent increase in startups (262) after a decline in the previous year. This is particularly noteworthy given that Berlin had to contend with difficult financing conditions last year. Hamburg also recorded significant growth with 90 new startups. In Munich, on the other hand, the startup rate rose only slightly by two percent to 95 companies.
In terms of population, however, Munich remains the leader: in the twelve months from July 2022 to June 2023, 12.6 new start-ups were counted per 100,000 inhabitants in arithmetical terms. This is slightly higher than in Berlin with 12.3 start-ups per 100,000 inhabitants.
The optimistic signs of rising startup activity give hope that German startups can recover from the challenges of the past year and experience a new upswing.