Berlin consistently leads as the city with the highest start-up registrations - Berlin persists as a hub for startup ventures, according to Giffey
Berlin, the German start-up capital, leads in company foundations primarily due to its high density of startups, strong university connections, and an ecosystem well-integrated with investors and corporations. However, when it comes to venture capital investments, Bavaria takes the lead.
Key points explaining this dynamic include:
Berlin's start-up formation strength
Berlin accounted for about 27% of new startups nationwide, holding a significant share of company foundations in Germany. It has a dense, vibrant startup ecosystem supported by numerous accelerators, co-working spaces, and a diverse entrepreneurial community, making it fertile ground for new company formations.
Bavaria’s lead in venture capital
Bavaria, particularly Munich, benefits from UnternehmerTUM, one of Europe’s largest innovation and startup centers, tightly linked to TUM. This lab is integrated with strong private financing, corporate partners, and the venture capital fund UVC Partners, who collectively helped attract about €2 billion in funding to its startups in recent years. In the first half of 2025, Bavarian startups raised nearly €2.1 billion, surpassing Berlin’s €1.5 billion despite having fewer total startups founded.
Government and ecosystem support
Germany’s federal startup factories initiative builds on successful models like Bavaria’s UnternehmerTUM by creating regional hubs to stimulate both startup creation and funding, reflecting Bavaria’s role as a model for combining research commercialization, corporate innovation, and VC access.
Startup volume versus funding volume
While Bavaria focuses on scaling fewer but more capital-intensive startups, Berlin’s ecosystem encourages more numerous, earlier-stage startups that boost foundation numbers but often secure smaller rounds initially.
In summary, Berlin leads in sheer volume of new startups due to its broad, dynamic entrepreneurial culture and ecosystem density, while Bavaria excels in attracting large venture capital investments through mature innovation infrastructure and corporate-VC linkages. This complementary divide explains the German startup landscape’s dual hubs.
The study by the consulting firm EY showed that Bavaria overtook Berlin in terms of venture capital investments. However, Berlin remains the city with the most investment rounds nationwide, with 132 rounds last year compared to 76 in Bavaria. Berlin also has more company foundations in the digital economy than any other city in Germany.
The state government is focusing on positioning Berlin stronger in DefTech, alongside artificial intelligence, health, finance, sustainability, and games. The upcoming joint Bayer-Charité campus with the translation center for gene and cell therapies in Berlin-Wedding is expected to boost Berlin's start-up ecosystem in the health sector. This focus on DefTech is a significant factor in Berlin's start-up growth, as the geopolitical situation influences Berlin's growth in DefTech due to the combination of AI development and industrial production.
The trend towards defense technology (DefTech) is a significant factor in Berlin's start-up growth. The city is the German start-up capital, according to Economics Senator Franziska Giffey (SPD). Despite lagging behind Munich in the health and bio sectors, Berlin aims to change this. Federal states like Bavaria have an advantage in DefTech due to their large production sites for weapons systems and the armaments industry.
References:
[1] EY (2025). German Startup Barometer. www.ey.com/de/de/services/consulting/innovation-performance/german-startup-barometer
[2] Statista (2025). Venture capital investments in Germany by city. www.statista.com/statistics/1142466/venture-capital-investments-in-germany-by-city/
[3] Startup Genome (2024). Global Startup Ecosystem Report. www.startupgenome.com/research/gser
[4] Gründungsmonitor (2024). Gründungsmonitor Deutschland. www.gruendungsmonitor.de/
[5] Berlin Partner für Wirtschaft und Technologie (2024). Berlin Startup Monitor. www.berlin-partner.de/en/startup-monitor/
- In recent years, the vibrant startup ecosystem in Berlin, encompassing numerous accelerators, co-working spaces, and a diverse entrepreneurial community, has consistently resulted in a high number of employment opportunities related to new startups, supporting the city's reputation as the German start-up capital.
- In contrast, Bavaria, particularly Munich, has been successful in securing significant finance from venture capitalists, thanks in part to the presence of UnternehmerTUM, a prominent innovation and startup center with strong corporate and private financing connections, which has attracted over €2 billion in funding for its startups. This emphasis on finance and technology has established Bavaria as a leader in scaling capital-intensive startups.
