Struggle with funding reported among German start-ups as per Bitkom study
German tech startups are facing a challenging funding landscape, with a significant number considering a move abroad in search of better opportunities, according to a recent survey by Bitkom Research.
The survey, which involved 152 tech startups from Germany between calendar week 12 and 21 in the year 2025, revealed that one in four startups is considering a location change, with 25% considering a European country outside the EU and 28% considering the USA.
The key challenges for German startups regarding venture capital (VC) are numerous. Traditional VC models struggle to support deep tech startups that require long development cycles, patient capital, and extensive regulatory compliance. Many VCs expect quick returns and visible traction, leading deep tech startups to face a "valley of death" in funding for R&D, as well as smaller available fund sizes in Europe compared to the U.S.
The European (including German) environment is also fragmented with multiple markets and heavy bureaucracy, which slows down funding cycles and deters some VC engagement or raises costs. This fragmentation, combined with a high failure rate in early stages—with roughly 75% of seed-stage startups failing and only 13% progressing to Series A rounds—compounds difficulties in securing continuous funding and scaling.
To address these challenges, innovative initiatives and approaches have emerged. The rise of stage-specific venture capital strategies integrates corporate partnerships to accelerate growth. For example, Wayra Germany employs a "venture-client" model where startups not only gain funding but also secure immediate enterprise customers through Telefónica’s large user base.
There are also calls and emerging funding models focused on providing long-term capital suited to deep tech sectors, encompassing healthcare, energy, and aerospace. These models emphasize overcoming regulatory hurdles and maintaining R&D funding through public and quasi-public means, supplemented by specialized VC funds or new funding structures tailored to the long timelines deep tech requires.
Policymakers and investors are recognizing the benefits of diversifying investments across many smaller startups rather than relying on large industrial mega-projects alone. This shift aims to enhance job creation, risk management, and sustainable ecosystem development.
Ralf Wintergerst, President of Bitkom, assesses that the difficult financing situation compared to international peers has been a challenge for many German startups for years. He states that the goal should be to make Germany attractive for founders from other European countries and the USA.
Despite the challenges, there is a sense of optimism among the surveyed startups. 50% of founders consider it rather likely they will obtain the necessary funds, while 29% of founders consider it very likely. The average capital requirement of startups in the next two years is around 2.5 million euros, and 53% of surveyed startups can imagine an IPO in principle. However, 17% of founders see low chances of obtaining the necessary funds, and only 23 percent of the surveyed startups consider the available venture capital in Germany sufficient.
The survey also found that 81 percent of the startups find that investors have become more cautious due to the economic situation. Despite this, 2% of founders virtually exclude a successful financing, indicating a resilient spirit among German startups.
In summary, German tech startups grapple with traditional VC’s misfit to deep tech timelines, funding fragmentation, and risk-averse investor behavior, alongside systemic challenges from large-scale industry focus. Solutions include stage-specific corporate-linked funding models that bridge market access gaps, patient capital initiatives for complex sectors, and a strategic pivot toward fostering diverse, smaller-scale innovations, which collectively work to better serve Germany’s evolving startup ecosystem.
- The survey results showed that one-quarter of German startups are considering a move abroad due to the challenging finance landscape, with some considering technology hubs like the USA.
- To address the finance and technology challenges faced by German startups, policymakers and investors are focused on developing stage-specific venture capital strategies that integrate corporate partnerships and provide long-term capital suited to deep tech sectors.
