Berlin founders threaten to lose their investors in Paris

Berlin as an important address for startup financiers? The capital threatens to be overtaken by investments from Paris — because France avoids the mistakes of German politicians.

Paris could overtake Berlin in the coming years for investments in startups

In 2018, lenders spent almost 2.5 billion euros in growth companies in the French capital — 39 percent more than in 2017. In Berlin, start-ups collected 12 percent less fresh money, according to a report published Tuesday.

With just over € 2.6 billion, Berlin was only just ahead of the investment. In 2017, the gap in capital between the German capital and Paris of 1.2 billion euros was therefore still large. In the number of deals Paris (366) in comparison with Berlin (244) already ahead.

“French policy has a clear aim to make France the number one startup nation in Europe”, said EY partner Peter Lennartz. Although there are less large deals from corporations or funds that put money in auspicious startups. Overall, however, the financing is better than in this country, according to the paper, which was the German Press Agency.

Massive tax breaks for founders

In France, there are uncomplicated residence permits for founders, massive tax breaks for pioneers and investors, and cheap lending from the state. If Germany does not adjust, France will soon pass by investments in startups.

In 2018, the Berlin used car portal Auto1 and the Hamburg clothing startup About You had received the largest financial injections from investors in Europe. Thanks to such deals, Germany was clearly ahead of France in all investments (4.6 billion euros, plus seven percent). There, however, there were leaps and bounds.

Unchallenged at the top in Europe remains Britain with the metropolis of London, where startups collected five billion euros last year. In this country, growth companies are often difficult to large injection of money for expansion. The development bank KfW estimates the financing gap in the early growth phase at up to 600 million euros per year. The federal government wants to promote the start-up culture, for example, with state-supported venture capital funds.


Originally published at TheStartupFounder.com.