Bavaria remains reliant on the historic dominance of its startup financial resources
In a significant shift within Germany's startup ecosystem, Bavaria is rapidly closing the gap with Berlin in terms of venture capital raised by startups, according to a study by EY. The report, based on data from the Crunchbase database and figures from startups and investors, suggests that the venture capital landscape in Germany is undergoing a substantial transformation.
## Why Bavaria is Attractive for Venture Capital
Bayern Kapital, a public venture capital company in Bavaria, has been actively investing in startups since its inception in 1995. The region also boasts premier research institutions like the Technical University of Munich (TUM), which has a robust startup ecosystem. The diversity of industries in Bavaria, including automotive, technology, and biotechnology, offers a wide range of opportunities for venture capital investments.
Moreover, the German government's initiatives to establish startup factories across the country, including in Bavaria, aim to create more startup hubs and foster innovation. While Berlin remains a major hub, these initiatives can help spread investment opportunities across different regions.
## Industries Contributing to the Shift
The shift in the startup ecosystem is evident in sectors such as automotive and mobility, technology and software, and biotechnology and life sciences. Bavaria's strong position in the automotive industry, with companies like BMW and Audi, is driving innovation and investment in electric and autonomous vehicles. The region also supports a growing tech industry, with startups in areas like AI, cybersecurity, and software development. In biotechnology, Bavaria attracts investments in pharmaceuticals and medical devices.
## Current Investment Landscape
Despite Berlin's continued dominance in the number of funding rounds, Bavaria is experiencing a surge in venture capital. In the first half of 2025, Bavarian startups raised approximately 2.1 billion euros, significantly more than startups from Berlin (1.5 billion). This growth almost quadrupled within a year, with nearly every second euro of venture capital for German startups flowing to Bavaria.
Munich, the capital of Bavaria, recorded a significant investment volume, although it experienced a decline compared to previous years due to fewer large-scale transactions. Nonetheless, the overall trend in startup foundings across Germany is positive, with an increase of 9% in the first half of 2025 compared to the second half of 2024.
The study by EY indicates that Bavaria leads in the largest funding rounds, with Helsing (600 million euros), Green Flexibility (400 million euros), Quantum Systems, Scalable Capital, and Amboss (Berlin) being the top 5 recipients.
In conclusion, while Berlin remains the leading hub for startup investments in Germany, Bavaria is experiencing significant growth and contributions to the German startup ecosystem. This transformation is due to the region's established venture capital environment, strong research institutions, diversified industries, and government initiatives. As investors focus on defense, AI, and energy technologies, Bavaria's position in these sectors is expected to further strengthen its position in the German startup landscape.
Sources: ntv.de and jki/dpa.
- The German government's initiatives to establish startup factories and foster innovation have been integral in attracting venture capital, as seen in the case of Bavaria, where startups in sports technology could flourish and benefit from these initiatives.
- As Bavaria leads in the largest funding rounds, with investments in areas such as automotive, technology, biotechnology, and other sectors, it provides an ideal environment for potential employment, with several opportunities arising from the burgeoning employment policies within Bavarian startups in the sports industry.
