German Startup Activity Rises Despite Economic Slowdown

A report from the German Startups Association reveals a surge in startup activity in Germany despite a sluggish economic environment. Around 1,500 new startups were founded in the first half of this year, marking a 9% increase compared to the second half of the previous year.

These figures suggest that Germany could witness the creation of more than 3,000 startups within a single year for the first time since 2021.

Most of these new businesses were launched in the software sector, driven by growing demand for artificial intelligence applications, according to Deutsche Presse-Agentur (dpa).

At the same time, the e-commerce sector continues to face challenges, although there are signs of recovery following the downturn caused by the coronavirus pandemic.

In 2021, nearly 3,200 startups were launched, but that number dropped to around 2,500 in 2023 as investors became cautious amid rising interest rates and economic uncertainty.

Many startups faced funding shortages, leading to layoffs and bankruptcies.

Bavaria, North Rhine-Westphalia, and Berlin led the list of states with the highest number of new startups in the first half of this year. Cities with strong research ties, including Munich, Heidelberg, and Berlin, recorded the highest startup formation rates relative to their population sizes.

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