The German startup ecosystem is off to a strong start in 2026: Between January and June, 3,053 new startups were founded. This represents a 52 percent increase compared to the second half of 2025 and means more startups were founded than in all of 2024.
Germany quietly setting startup records while everyone keeps insisting Europe can’t innovate is pretty funny. The real test comes next though: founding 3,000 companies is great, but if the successful ones still need to move to the US to raise serious growth capital, Germany has only solved half the problem.
The main issue that Europe tends to have isn’t purely creating new companies, it is scaling them. Because the “single market” is still waaaay too different between countries, because the capital markets are too fractured, and banks have a low risk tolerance, companies can’t scale up nearly as quickly , which is why for example, Spotify is listed in US indices
Absolutely. Europe doesn’t lack ideas or founders: it lacks one deep, liquid capital market. A real Capital Markets Union could let European savings fund European scaleups instead of watching them head to New York for serious growth capital.
The “no real single market” tends to not apply to software companies, which can spread to other countries in europe relatively easily. There are also some reasons why people think its unlikely to be a lack of capital. For example if there were less venture capital in europe, then that capital would go to only the most promising startups (VCs can pick and choose who they fund). So you would expect the return on investment to be higher than in the US. But that’s not the case.
Other reasons that impact scaling of startups are lack of know-how since highly skilled people tend to move to where the biggest companies are, e.g. silicon valley. And, and this one is always hard to hear, labor protections. It is a lot more risky to scale up when the people you hire are hard to let go if you encounter hurdles while scaling up. The eu countries with comparably many unicorns, are ones that have very flexible hiring and firing.
The no single market still applies to software, namely due to A- higher compliance requirements in Europe, B- waaaay bigger localisation efforts
Measuring the number of new startup’s as a success factor is IMHO very stupid. I once started a startup. Starting a startup is not that difficult. Keep that startup running past the five year mark, then you may start to talk about success…
Yes, but for germany this might be a metric for reduced bureucracy. Failing a startup is always easy, but starting a startup in germany might not be trivial.
Otherwise I agree.
It is very easy. Can be done within a week for a capital based company and even faster with a personal liability company.
Source: Am a Founder.
Verena Pausder comments: “To create global champions ‘Made in Europe,’ we need a strong European capital market.
She should start a startup to fund startups.
Though the easiest way would be to overvalue a company, e.g. an electric car company, which allows its investors to borrow against the shares and invest that money in new startups.
Unfortunately, Europe doesn’t make it easy to borrow against shares yet. /s
Or one expands typical funding channels. Why do you think that investment is a bad thing?
I don’t think that. This was an attempt at questioning the value of Tesla with a dash of conspiracy theory.
Europe has to expand the channels but the safer laws make it more difficult, which is the right thing. Otherwise we can expect that our banks have to be rescued soon.
Many laws in Europe are not about risk aversion, even though they are perceived like that (and there’s a media obsession with this trope).
Forbidding pension funds from using certain investment types does not reduce long term risk, it only reduces short term risk.
The real problem in Europe is that it ingested neoliberalism much more deeply than one might think. One consequence is that Europe has an ideologically motivated short term investment horizon.
Another consequence of this ideological stringency in Europe is that Europe has subsidies (by GDP) that are about half as big as US subsidies and a fourth of China’s.
Many european countries have a more than twice as large share of outsourced state tasks as the US.
Etc. Etc.
Many laws in Europe are not about risk aversion, even though they are perceived like that
Which laws would you change?
The Alternative Investment Fund Managers Directive (AIFMD) - Directive 2011/61/EU.
https://en.wikipedia.org/wiki/Alternative_Investment_Fund_Managers_Directive_2011
Many laws in Europe are not about risk aversion, even though they are perceived like that (and there’s a media obsession with this trope).
You are right, no mentioning of any problems. What are the problems?
Well, a big problem is that many pension funds cannot invest into firms.
How many of those startup’s are one person delivery contract firms, exclusively working for Amazon?
Yeah but most of these startups were founded because people fear for their job and want a redundancy…
Isn’t that kinda what you’d want to see though? I.e. if older less competitive businesses are not able to operate or compete, we don’t want them to just hold onto talented people, and we don’t want those talented people to be jobless. It’s good if those people go and start new, dynamic, competitive companies.
Obviously there’s a balance to be found, and we don’t want companies to be allowed to just dump employees for no reason every time they hit a hiccup, but Germany has very generous worker protections, and a strong social safety net. It’s good to see these people starting new companies.
Or have been made redundant and now use their severance.
This is NOT good news. It is actually bad news.
A lot of these startups are founded by people who have recently been fired or otherwise made redundant. The survivability of these companies is questionable.
Additionally there are on going issues that the relatively quick process of starting up a company is used by organised crime in money laundering (e.g. Chinese Prato based structures) - there are estimates that these use thousands of shell companies that vanish after months
Just looking at the number of startups is a very very bad metric. Much more interesting would be:
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Gross revenue in the first year
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Average employees per Startup (a lot of these are single employee companies)
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Reported profit per company after one year
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Lifetime of startup companies
I am afraid a lot of these metrics will be really really bad looking.
Despite what people think founding a company is easy in Germany. You can do found a limited liability company with basically only the notary costs+1€. I had mine started in a week at the beginning of Covid. Getting a notary appointment is the hardest and most expensive part and that is only necessary for a limited liability company. Otherwise? Generate a few documents and send them in. You can do that electronically these days if you can sign via eIDAS.
No issues.
Bureaucracy comes later.
The German mandatory old age insurance comes to check in. Oh…you are building a new company, are the only employee or have very little employees and only have two clients so far? Yeah fuck you that’s dependent employment and you are not a actual company. They can even decide in one year it’s not and then come back next year and decide differently.
The workers comp deciding seemingly randomly when they come to check you actually do things the way they want.
The tax office is a different matter as well. (Mine is actually somewhat cooperative and nice. Other’s aren’t)
And don’t get me started on the sheer lack of competence in the German banking system. I operate outside Germany as well and the difference is staggering.I happily let someone pull a teeth out of my jaw without anaesthesia or deal with the tax office every day if I could avoid those. With my Italian and Swiss banks? No issues.
Source: Founder - 6 years ago. Still hating it. Worst and best decision of my life.
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