Comparing data from the 1st April 2023 to 31st March 2024 (Q2 2023 to Q1 2024), NGP Capital’s DACH Startups Decoded report analysed over 1676 venture-backed startups and 1748 funding rounds from across Germany, Switzerland, Austria, and Liechtenstein, to show the latest trends in startup fundraising, dealmaking, and industry activity from across the region.

NGP Capital’s analysis reveals that while the region’s startup funding levels have dropped significantly from their 2021 peak, quarterly figures have stabilised around the $2.5-$3.2 billion range since Q3 2022 - indicating that the market has found a new equilibrium. Current funding levels are also higher than the pre-pandemic years of 2019 and 2020, which suggests that the DACH startup and investment ecosystem has maintained some of the gains made during the boom period.

As the region’s powerhouse, Germany accounts for 75.2% of the total venture funding raised in the DACH region over the last twelve months. However, when it comes to per capita funding, Switzerland stands out as the clear leader in the region, with a $247 per capita and nearly on par with UK’s $305 per capita.

The research also reveals the following key insights into startup investment trends in the DACH region:

• AI startups are fuelling the current DACH VC boom: Funding soared 114% YoY in Q1 2024 to $1.38 billion
• Deeptech investment, particularly industrial tech, is also booming: $2.23 billion raised over the past year, with Advanced Manufacturing ($1.37 billion), Robotics ($468 million), and Computer Vision ($227 million) leading the surge
• DACH swings to B2B: Funding disparity emerges between B2C and B2B funding trends since Q2 2022. With B2B funding exceeding $2B for three quarters, while funding for B2C companies remains on a downward trajectory, with only $0.5 billion raised in Q1 2024
• New startup hubs are emerging in the region, with Hamburg, Dresden, and Frankfurt experiencing substantial growth in startup activity
• US hiring boom for DACH startups: 25% of open positions with DACH startups are in the USA – suggesting DACH startups are expanding into the USA, rather than the UK or Europe

Out of the 128,559 positions advertised by startups 31,281 (25%) have been outside DACH, and 8,310 were for positions in the USA

• Germany continues to dominate DACH region VC funding, with 75.2% of the total venture funding in the DACH region invested in German startups, compared with 19.6% in Switzerland, 4.6% Austria, and 0.6% Liechtenstein
• Local VCs still dominate: Growth stage startups continue to rely on local investors, with most international investors choosing to focus on seed stage startups

Christian Noske, Berlin-based Partner of NGP Capital, comments: “NGP Capital sees the DACH market experiencing a surge, particularly in AI and industrial tech. This growth extends beyond traditional hubs like Berlin, Munich, and Zurich, with new startup ecosystems flourishing across the region. However, challenges remain, including navigating bureaucracy, securing growth funding, and attracting top talent. Faster progress on these fronts is essential for continued growth.

“At the heart of this thriving ecosystem, NGP Capital remains actively engaged in investing, with our latest portfolio company, Daedalus, perfectly embodying the region's strengths: a rich history of engineering excellence and a deep pool of talented individuals. This combination has undoubtedly fuelled the ecosystem's growth, attracting international recognition and investment. Looking forward, we anticipate continued momentum in the coming year, with a significant increase in fundraising activity across all stages of development.”

The full report is available –  www.ngpcap.com/insights/dach-startups-decoded-vol-2024-5-key-startup-trends-to-watch