DACH Startups Decoded Vol.2024: 5 key startup trends to watch

The last couple of years have been marked with uncertainty for startups and the venture space at large – as the industry tried to find a new normal amidst closed public markets, a greater shift towards profitability, and shaky global geopolitics.

On the back of this, the DACH startup ecosystem continued to evolve and remain resilient, presenting startups in the region with both uncertainties and opportunities to scale and grow globally.

Today, in its second year running, we’re thrilled to launch our DACH Startups Decoded Vol. 2024 – a report diving into the current state of the DACH Startup ecosystem.

For almost two decades, we, at NGP Capital, have been at the forefront of the burgeoning entrepreneurial scene of the DACH startup ecosystem, supporting trailblazers like GetYourGuide, ANYbotics, Babbel, Scandit, Daedalus, and others.

In that time, we’ve witnessed how the DACH region firmly took its place as one of the top startup hubs in the world, producing global, category-leading companies which have disrupted traditional industries, and reshaped consumer behaviour.

DACH Startups Decoded Vol. 2024 Snapshot

Comparing data from Q2 2023 to Q1 2024, our report analyzed over 1676 venture-backed startups and 1748 funding rounds from across Germany, Switzerland, Austria, and Liechtenstein, to shed light on trends across dealmaking, fundraising, and industries on the region’s entrepreneurial landscape.

The analysis is based on data from NGP Capital’s data & ML platform Q, which aggregates & analyzes data across multiple sources.

5 key startup trends in the report:

1.        Stabilized Funding Figures:

·   Quarterly figures have stabilized around the $2.5-$3.2 billion range since Q3 2022, indicating market equilibrium.

2.      Germany Leading, Switzerland Excelling Per Capita:

·   Germany accounts for 75.2% of total venture funding in the DACH region, while Switzerland leads in per capita funding with $247, nearly matching the UK's $305.

3.      AI Startups on the Rise:

·   Funding for DACH AI startups soared by 114% YoY in Q1 2024 to $1.38 billion.

4.      Boom in Deeptech Investments:

·   Deeptech, particularly industrial tech, raised $2.23 billion over the past year, with Advanced Manufacturing, Robotics, and Computer Vision leading the surge.

5.      B2B vs B2C Funding Disparity:

·   B2B funding has consistently exceeded $2B, while B2C funding is on a downward trend, with only $0.5 billion raised in Q1 2024.

AI & Industrial Tech boom to birth the next wave of DACH leaders

While there has been a significant shift in funding dynamics resulting in a stronger focus on B2B startups, it’s clear the region’s strong engineering and technical expertise is poised to breed a new group of category winners.

Commenting on the report’s findings, Christian Noske, NGP’s Berlin-based Partner said:

“We’re seeing 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."

Furthermore, as the potential impact of Artificial Intelligence dominates our collective psyche, we believe DACH-based startups possess the competitive edge needed to capitalize on the transformative potential of AI across various industries.

With funding stabilizing and innovation thriving, the region is set to foster the next wave of global leaders. Dive into the report to explore the latest trends and insights driving the future of startups in the DACH region.

If you have any comments about the report or would like to discuss its content, drop us an email here.