Tracxn, a leading global SaaS-based market intelligence platform, has released its Geo Quarterly Report: Germany Tech - Q3 2023. The report, based on Tracxn’s extensive database, provides insights into the Germany Tech space.
The German Tech startup ecosystem ranks fifth after the US, China, the UK and India based on the funding to date and ranks second after the UK in the Europe region based on the overall funds received to date. In 2023, Germany has raised a total of $5.5 billion in funding, ranking third after the UK and France in the Europe region.
German Tech startups started witnessing a steady increase in funding since the start of 2023. In Q1 2023, this sector witnessed a 24% increase compared with Q4 2022, and in Q2 a 9.5% uptick was observed when compared with Q1 2023. However, funding in Q3 2023 has dropped by 20% from $2 billion in Q2 2023 to $1.6 billion in Q3 2023.
This decrease in funding can be attributed to the ongoing macroeconomic conditions, and has also been accelerated by the increase in gas prices in Europe, which has slowed down economic activity.
In Q3 2023, the German Tech startup ecosystem raised a total of $1.6 billion in Q3 2023, a decline of 20% from the $2 billion raised in both Q2 2023 and Q3 2022. Seed-stage funding worth $125 million was observed in the third quarter of 2023, a 40% drop compared with $207 million raised in Q2 2023 and also a 37% drop from $198 million raised in Q3 2022.
Early-stage funding in Q3 2023 stood at $702 million, a 14% dip from $819 million raised in the previous quarter (Q2 2023), and a slight uptick of 5% from $666 million raised in the corresponding quarter last year (Q3 2022).
This sector attracted late-stage investments worth $819 million in Q3 2023, a 19% drop compared with $1 billion in Q2 2023 and a decline of 26% compared to $1.1 billion raised in Q3 2022.
Only three companies have raised funding above $100 million in Q3 2023, as against five such rounds in the previous quarter. Also, no new unicorns emerged during this quarter.
Enterprise Applications, Enterprise Infrastructure and Maritime & Defense Tech were the top three funded segments in the overall sector. The Enterprise Applications space attracted investments worth $956 million in Q3 2023, a growth of 306% from $235 million raised in the previous quarter and a growth of 3% compared with the corresponding quarter last year.
Life Sciences and Environment Tech were the most affected segments in Q3 2023. Funding into the Environment Tech and Life Sciences spaces fell 83.7% and 68%, respectively, in Q3 2023, when compared with Q2 2023.
Only one company - Thyssenkrupp nucera - went public in Q3 2023, which is also the first IPO from the Germany Tech space this year. In the same quarter, 44 acquisitions took place, significantly lower than 60 in Q2 2023 and 71 in Q3 2022.
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Among German cities, Munich, Frankfurt and Berlin raised the maximum funding in the third quarter of the year. Companies based in Munich raised $529 million in Q3 2023, followed by those based in Frankfurt Am Main ($438 million) and Berlin ($251 million).
HTGF, German Accelerator and Startplatz are the most active investors in this space. HTGF, Rheingau Founders, Bayern Kapital emerged as the top seed-stage investors in Q3 2023, while Capnamic Ventures, General Catalyst, and EnBW New Ventures were top early-stage investors in Q3 2023. Mutschler Ventures, Cristiano Ronaldo, VSquared Ventures were the most active late-stage investors in Q3 2023.
