Most of the 4070 business angels who were active in 2020 come – not surprisingly – from Berlin. A total of 579 of them live in the nation’s capital city. Munich comes in second place with 366 business angels, and third is taken by Hamburg with 281. There are also some surprises among the top 20 cities: For example that 44 of the angel investors are from London, which puts the British capital right after Stuttgart (46 business angels). Vienna (30) and Zurich (26) also made it into the top 20. Another highlight is that Grünwald (41) and Gräfelfing (20), two towns near Munich, are also among the 20 cities with the most business angels who are active in Germany.
This local distribution is important because many angels prefer to invest close to home. To give an example, the 366 Munich-based angels invested in a total of 477 startups last year, 254 of which were in the Bavarian state capital. That puts the share of hometown investments at 53 percent. The Berlin and Hamburg angels behave similarly, with the respective shares at 73 and 49 percent. In Frankfurt am Main, Cologne and Düsseldorf, in contrast, investments are focused not only on local startups, but also on Berlin, and for angels in Stuttgart, Munich is an attractive place to invest.
Business angels’ preferences
The angels’ favorite field for investing is the medical industry, which brought in 946 individual investments last year according to the study. Software comes in second place with 646 investments, and eCommerce took third place with 519 investments. This might not just be due to business angels’ preferences, however, as what is being offered may also influence the demand. Just like in 2019, medicine, software and eCommerce were once again the industries with the most startups in 2020.
For these investments, business angels need to decide if they want to invest in a startup as natural person or as a company. The two groups are virtually the same size: A narrow majority of 52 percent decided to invest directly as natural persons. The authors of the study attribute this to the fact that the running costs of a holding are unreasonably high compared to the tax advantages.
A look at the gender ratio shows that women are significantly underrepresented. Only 11 percent of all angels who invested in at least one startup in 2020 were female. And while that is more than the 7 percent estimated by Business Angels Netzwerk Deutschland, the figure is still far from the 25 percent target for 2025.
About the study
The “startupdetector report 2020” is based on notices from the German commercial register, which startupdetector analyzes weekly. The commercial register notices that were included were all new entries and capital increases in Branch B (HRB) between 1 January 2020 and 31 December 2020. Publicly available data about management teams was also collected to supply information about the age, gender and experience of those founding startups. In gathering information about startup funding rounds, only companies that were no older than ten years at the time of investment were included. Only capital increases with external parties were classified as an investment and included in the evaluation.