Where in Germany are the most startups being launched?
According to an analysis by the Startup Association, 1,500 new startups were founded in the first half of the year – that's nine percent more than in the second half of 2024.
Most of the startups were founded in Bavaria, North Rhine-Westphalia and Berlin, but the eastern state of Saxony also saw tremendous growth. Many of the new companies were focused in the software sector - including AI-supported automation services - and online retail.
The Startup Association
suggested that the number of new startups sent a strong signal of recovery after the sector's recent challenges.
Where in Germany are startups booming?
In absolute numbers, Bavaria ( with 343 new startups), North Rhine-Westphalia (281), and Berlin (248) top the list for new company formations in the first half of 2025.
As a city, Berlin remains Germany's most prominent startup hub with around 500 new companies founded annually.
However, when measured per capita, Munich narrowly leads with 13.5 new startups launched per 100,000 inhabitants in the past year. Startup founders in the Bavarian capital can take advantage of support from some leading incubators and accelerators such as
UnternehmerTUM
.
Other university cities such as Heidelberg, Darmstadt and Aachen also saw a large number of new startups founded relative to their size, highlighting the growing importance of research-driven locations.
Technology and science-based startups tend to crop up in Germany's university cities, whereas Berlin and Munich attract a broader mix of ventures, including in the creative industries and digital platforms.
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Interestingly, the eastern German state of Saxony has seen by far the highest year-on-year increase in startup launches, with a staggering growth rate of 71 percent.
In comparison Bavaria saw a growth rate of 23 percent, and North Rhine-Westphalia had 16 percent.
According to the Startup Association report, Saxony's surge can be attributed to targeted regional initiatives and improved support structures.
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How has the industry developed?
After a record year in 2021, startup formations dropped to less than 2,500 in 2023, largely as a result of economic uncertainty and higher interest rates.
Then in 2024 a turnaround began. Venture capital investment in German startups has risen significantly over the last 18 months, reaching a total of €4 billion in just the first half of this year, according to Germany's economic development bank (KfW).
The AI boom, renewed investor confidence, and public support programs including the
Digital Hub Initiative
have all contributed to the rebound.
READ ALSO:
What startups should know about Germany's new 'digital hub' cities
The current startup wave is dominated by the software sector, which accounted for 368 new companies in the first half of 2025.
The boom in AI is a key driver, with industrial solutions such as AI-supported automation growing by 29 percent.
The B2C segment is also rebounding, particularly in food (up 44 percent) and e-commerce (up 14 percent).
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