Business climate among start-ups close to the Corona low point | free press

2023-08-15 06:53:36

Economic slack, higher interest rates, cautious investors: After a long boom, start-ups in Germany are under pressure from several sides. Many are putting the brakes on their growth plans.

Berlin.

The weak economy and difficult financing conditions are becoming increasingly difficult for German start-ups. The business climate in the industry has fallen to the second lowest level after the Corona low of 2020, according to a survey by the startup association, which is available to the German Press Agency. According to this, the business climate of 38.1 points is only slightly above the value in the pandemic year 2020 (31.8 points). The decline since the record year 2021 thus continued. 1825 start-ups took part in the survey.

The business climate, which is calculated analogously to the barometer of the Ifo Institute as a balance from the assessment of the current situation and business expectations, shows great uncertainty among founders, it said. Almost two thirds (65 percent) find it difficult to assess the future situation. Business expectations have nevertheless increased slightly, while the current business situation is at its lowest since the beginning of the pandemic. “After the 2020 pandemic shock was followed by the acceleration of many innovations, the situation is now more problematic,” said the association, referring to inflation and higher interest rates. Start-ups acted cautiously: one in three had reduced new hires and changed financing plans.

Larger rounds of financing are not forthcoming

As recently as 2021, German start-ups had recorded record levels of investor financing. In the pandemic, digitization got a boost – whether in financial transactions, online shopping or food deliveries. But with the Ukraine war, rising interest rates and uncertainty about the economy, the market turned. Investors held back, many start-ups cut jobs, and funding collapsed in 2022. The situation remained difficult in the first half of the year: According to the consulting company EY, start-ups raised around 3.1 billion euros – almost half less than a year earlier.

Above all, larger financing rounds are missing. The start-up association reported that there had not yet been a round of more than 250 million euros this year. In 2022 there were four and in 2021 eight. Almost half of the founders consider the investment willingness of financiers such as venture capital funds to be bad, only 15 percent think it is good.

Christian Miele, CEO of the start-up association, called for the federal government to push start-up issues more forward. “This applies, for example, to the Future Financing Act, which German start-ups have been waiting for for a long time – it should now be passed quickly.” The law is intended to promote the start-up location, for example through more favorable rules for employee participation and easier access to the capital market for growth companies. However, the project has been delayed. (dpa)