investment in venture capital shifts from Berlin to Bavaria
In the first half of 2025, Bavaria, particularly Munich, has outperformed Berlin in attracting venture capital (VC) investment, despite Berlin hosting nearly double the number of funding rounds. This trend indicates that Bavaria is attracting fewer but larger, potentially more mature deals, according to a study based on data from Crunchbase and figures from startups and investors.
The reasons for Bavaria's VC surge are rooted in its robust ecosystem for deep-tech and industry-focused startups, which typically require and justify larger investments due to longer development cycles and higher capital intensity. Bavaria's strength in these areas is demonstrated by companies like FERNRIDE, which develops teleoperation systems for autonomous vehicles in Munich.
Software and analytics, deep-tech, and life sciences are the key industries driving the trend in Bavaria. The region benefits from strong technical universities and research institutions, leading to a pipeline of high-potential, technology-driven companies. Local investors and corporate venture arms are also more willing to write larger checks for scalable, industrial, or enterprise technologies in Bavaria.
Berlin, while still the startup capital of Germany by volume, is seeing more, smaller deals across a broader range of sectors. The study indicates a growth in the number of funding rounds and large deals over 100 million euros, suggesting that the startup industry has recovered from its post-Corona boom crisis.
The table below summarises the key metrics for Bavaria (Munich) and Berlin in 2025:
| Metric | Bavaria (Munich) | Berlin | |---------------------------|------------------------------|-------------------------------| | Total VC Investment (H1 2025) | Higher | Lower | | Number of Funding Rounds | Fewer | Nearly double Bavaria’s | | Typical Deal Size | Larger, later-stage | More, smaller, early-stage | | Key Industries | Software, deep-tech, medtech | Broad, including ICT, fintech |
As Bavaria continues to attract more VC investment, its economic strength benefits the startup location, according to Pruver. However, North Rhine-Westphalia and Baden-Württemberg saw declines in venture capital funding.
In conclusion, Bavaria's success in attracting VC investment is due to its focus on high-value, deep-tech, and industry-focused startups that secure larger funding rounds. The trend is driven by Bavaria's strengths in software, analytics, deep-tech, industrial automation, and life sciences, supported by its research institutions and local investor base. Berlin, while still leading in e-commerce, is seeing more, smaller deals across a broader range of sectors. The startup industry in Germany has had the third-best first half-year since 2015, according to EY, indicating a robust and growing ecosystem.
- What could be the financial implications for Bavaria if its deep-tech and industry-focused startups continue to secure larger VC investments?
- With Bavaria attracting larger finance for deep-tech startups, could we expect to see a surge in business growth in these sectors in the region?
