Foto: Andreas Heddergott - München Tourismus

On Par with Berlin: Where the Munich Startup Scene Stands

Based on the total number of inhabitants, startup founding activity in Munich and Berlin puts them virtually neck in neck as Germany’s leaders. Relative to Munich’s population and the number of foundings, the number of financing rounds is even higher.

According to a report by the industry journal startupdetector, 2,289 startups were founded in Germany in 2019. Just short of one in every four startups were founded in Berlin (564) and one in six startups were founded in Bavaria. In North Rhine-Westphalia, 368 startups were registered in the commercial registry for the first time last year. Yet these numbers alone are of little significance for two reasons: On the one hand, the number of inhabitants in the two federal states is very different. On the other hand, startups are more concentrated in large cities, which is why the number of founded startups needs to be considered in relation to the number of inhabitants to attain a more accurate overview of startup activities in Germany. Moreover, differentiations should be made based on cities and metropolitan areas instead of on federal states.

The startupdetector report lists Berlin as having the highest founding density with 15.47 founded startups per 100,000 inhabitants, followed by Hamburg (8.91) and Bavaria (3.14). Munich Startup also has the number of founded startups in the city and district of Munich from startupdetector: 274. Based on Munich’s 1.91 million residents in the city and district, the founding intensity amounts to 14.34 startups for every 100,000 inhabitants. That puts Munich in second place just behind Berlin and far ahead of Hamburg on the list of locations with the most pronounced startup founding activities in Germany.

B2B business models dominate startup activities

New startups in Munich focus on business customers at just about the same rate as all new German startups: 60 percent in Munich and 57 percent in Germany have a B2B business model. It should be noted that the startup scene in Bavaria’s capital city is quite diverse. The biggest groups: 20 percent develop software, 13 percent work in the medical industry, 10 percent in the field of mobility and 7 percent each in eCommerce and industry.

High investment intensity in Munich

When it comes to rounds of financing, Berlin takes first place yet again in the report: startupdetector provides figures from the last half of 2019. 272 Berlin-based startups were able to close investment deals during that time. Bavaria followed in second place with 232 investments, 185 of which were made in Munich’s startups. That means roughly two-thirds as many startups in Munich secured fresh capital in comparison to Berlin. Because Berlin has roughly twice the number of residents as Munich and its district and approximately twice as many new startups, a significantly higher investment intensity in Munich results.

Most of the financing rounds in Germany as a whole and in Munich were completed in the fields of healthcare and software. Money went to industrial startups a bit more often in Munich than in other parts of Germany.

The money for Munich startups in the second half of 2019 came from a total of 677 investors. Just shy of three-quarters of them were business angels (495). 110 VC companies and 36 corporate investors were active. The most deals in Munich were closed by Bayern Kapital (12), followed by High-Tech Gründerfonds (8), UnternehmerTUM and BayBG (7 each) and SEK Ventures (5).