Investors still believe in the potential of young European entrepreneurs and their ideas. This emerges from a study by the consulting firm Ernst & Young, which was published today. Accordingly, investors put record amounts in European startups last year. The big winners are Parisian startups. In the past year, investments there increased by 39 percent compared to the previous year. Meanwhile, Berlin startups received 12 percent less fresh capital than in 2018.
The cities comparison
In first place in the city comparison is London with an increase of three percent over the previous year. This corresponds to a financing volume of around five billion euros for startups. Berlin is in second place with 2.6 billion euros, closely followed by Paris with 2.5 billion euros. Munich occupies fourth place with a financing volume of 619 million euros. Hamburg is ranked sixth with 548 million euros. Overall, almost every second euro of venture capital in 2018 had flowed into a startup from the top three cities, write the makers of the study.
The city ranking coincides with the country comparison
British start-ups went last year, 7.2 billion euros. That’s 12 percent more than last year. German young entrepreneurs received EUR 4.6 billion, seven percent more than in 2017. In France, which ranks third in terms of investment volume in Europe, startup investments have even risen by 31 percent to EUR 3.4 billion.
Where does the success of French startups come from?
Peter Lennartz, responsible for the “EY Start-Up Initiative” in Germany, Austria and Switzerland: “French policy has a clear goal of developing France into the number one startup nation in Europe.” Founders received numerous support measures such as one uncomplicated issuing of residence permits, cheap loans from the state. In addition tax relief for founders and investors would come. “If Germany does not pay attention and does not do more for startups than before, our French neighbors will soon overtake us when it comes to financing start-ups”, says Lennartz.
The largest funding last year, according to study, the British online retailer Farfetch was 583 million euros. In second and third place are two German startups – Auto1 with 460 million euros and the clothing company About You with 264 million euros.
Also published on Medium.