Bits & Pretzels & Oktoberfest
Exploring the DACH Ecosystem
Here at Revaia, we don’t need a special excuse to write about the DACH ecosystem (Germany, Austria, Switzerland). With an office in Berlin and portfolio companies across the region, these countries occupy significant mindshare for our team. But this week there were two extra reminders that brought the focus squarely on DACH: Bits & Pretzels and Oktoberfest.
Bits & Pretzels had none other than Arnold Schwarzenegger as a keynote speaker to draw a crowd. But it’s hard to compete with the attractions at Munich’s annual Oktoberfest. Perhaps unsurprisingly, the second ended up being a follow-up networking event for the first. The Revaia team had representatives at both and confidently got into the Bavarian spirit!
But it wasn’t all fun and games. In our down time we had some breakout sessions on ESG and, of course, the state of play in the DACH region. In today’s piece, we’ll review some of the highlights from this insightful data-driven report.
The State of the DACH
Our internal discussion covered quite a bit more ground than we can share in today’s post. But we’ve distilled key slides from the presentation to give you an overview of the region in question. Let’s walk through it.
DACH is Wealthy and Educated
Germany has the fourth largest economy in the world. So it may be unsurprising that this region produces wealth. But to put it in perspective, each of these three countries maintains a GDP per capita that is higher than the EU average. In addition, the number of Information & Communication technology specialists as a percentage of the workforce is at or above the EU average in all three countries — noticeably high in Switzerland. These are strong economic indicators for consumer behavior and talent density that lead us to believe in the potential for growth in the area.
DACH loves filing patents & investing in R&D
Classic cultural stereotypes of Swiss watch-making and German engineering come to mind when you think of DACH. And what goes hand in hand with precision? Patents. DACH is responsible for roughly 20% of all patents filed with the European Patent Office. Furthermore, each of the countries spends more on R&D than the European average. This indicates a strong high-tech sector with a propensity for investing in research and design as a competitive edge.
DACH Dominates EU Tech Hubs
The EU tech ecosystem is growing rapidly. Hubs like London and Paris get much of the attention, but up-and-coming tech destinations are cropping up across the continent. Several of the top cities happen to be in DACH. Berlin, by far and away, the densest by deal volume and deal count; however, Munich and Zurich aren’t trailing far behind. Vienna and Basel have painted themselves as web3-friendly, carving out their own territory for cutting-edge startups.
DACH is Expanding Beyond Their Comfort Zone
One of the earliest pioneers in the DACH tech ecosystem was Rocket Internet — a startup studio, of sorts, known for deploying copy-cat models of successful American eCommerce companies. With their success, the region developed a reputation for being eCommerce-heavy. But in recent years, a boom in FinTech and CleanTech has started to evolve how they are perceived within the ecosystem.
DACH is Developing a Robust Early Stage Ecosystem
It goes without saying, a healthy early-stage ecosystem is a prerequisite for growth and late-stage success. As the pre-seed/seed venture network grows, so too does the opportunity in the region. Another leading indicator for potential!
DACH growth deals are led by international funds…
The growth deals are commanded by international VCs whereas the early-stage deals are predominantly DACH and EU VC-led. This shows a disparity in maturity and an opportunity for earlier stage deals and relationship development with a hyper-local approach. It also implies a chance for local players to edge their way into late stage deals traditionally led by foreign investors.
Prost!
As we invest our time, resources and stellar team in the region, it’s critical that we explore and maintain a close eye on how it develops. This analysis, among other things, is a part of the process that keeps us informed. And we’re excited to share these insights with you. We’re optimistic about the DACH region and honored to be a part of the strong and ever-growing ecosystem of investors. We can certainly cheers to that!
