EY Study: Billions for Startups: Berlin and Baden-Württemberg Overtake Bavaria

German startups attracted approximately 5.3 billion euros in venture capital during the first half of 2026, marking a 14 percent increase compared to the same period last year, according to a study by the consulting firm EY.

However, this growth in investment volume was accompanied by a nationwide decline in the number of funding rounds, which fell by 11 percent to 354. Berlin has reclaimed the leading position from Bavaria in terms of capital distribution. Startups in the capital city received nearly 1.7 billion euros, a 10 percent increase, and recorded the highest number of funding rounds at 95. Notably, the Berlin-based defense startup STARK alone secured 500 million euros.

Baden-Württemberg followed in second place with almost 1.6 billion euros in funding. This significant 475 percent surge from the previous year is attributed to a single major deal where the robotics startup Neura Robotics raised around 1.2 billion euros. Bavaria dropped to third place with just over 1.1 billion euros, a 46 percent decrease. This marks a first in EY's "Startup Barometer" that three federal states, Berlin, Baden-Württemberg, and Bavaria, each recorded startup investments in the billions.

EY attributes the decrease in funding rounds to investors' shifting focus. They are increasingly concentrating on a few large startups and perceived safe bets, leading to an increase in large transactions (over 50 million euros) from 55 to 67 percent of the total investment volume. Thomas Prüver, a partner at EY-Parthenon, views the capital increase as a positive signal but warns that the funding situation remains challenging, with smaller and younger startups often struggling to secure capital. He emphasizes that innovation thrives not just from individual flagship companies but from a broad and vibrant startup scene.