Bavaria is rapidly overtaking Berlin in terms of venture capital volume. For the first time, startups in the Free State have raised significantly more capital in funding rounds than young companies in the federal capital. At the same time, total investment in German startups rose by one third in the first half of this year to 4.6 billion euros – the highest level since 2022. This marks the third consecutive half-year increase in funding volume, with investments flowing primarily into software, AI, defence, and the energy transition. The figures come from an analysis by consulting firm EY.

In the first six months of this year, Bavarian startups secured nearly 2.1 billion euros in venture capital. That means nearly every second euro raised for VC financing in Germany went to the Free State. In comparison, 1.5 billion euros was invested in Berlin-based startups during the same period.

The largest injection of capital went to Munich-based AI startup Helsing (600 million euros), which generates its revenue in the defence sector. It was followed by battery storage provider Green Flexibility from Kempten in the Allgäu (400 million euros), and Berlin-based software startup Amboss (240 million euros), a learning app for doctors.

In the first half of 2025, six of the ten largest funding rounds in Germany involved startups based in Bavaria – and only three were from Berlin. The top 10 deal ranking is completed by Neura Robotics, a company based in Baden-Württemberg.

„The startup ecosystem in Germany has changed significantly over the past two years, with the balance shifting,“ summarises EY partner Thomas Prüver. While Berlin still sees the highest number of deals, and remains the clear national leader in areas like e–commerce, he notes a marked shift in investor priorities: „Driven by new megatrends, investors are focusing on different areas than in previous years – the war in Ukraine and the growing importance of the defence sector – the global advance of artificial intelligence – and the energy transition and restructuring of Germany’s energy supply.“

For example, the funding rounds for Bavaria–based startups Helsing and Quantum Systems were the largest and fourth–largest investments in Germany in the first half of the year – and both companies operate in the defence sector. Of the roughly 4.6 billion euros invested across Germany during this period, nearly 2 billion euros went to AI startups – another area where Bavaria is particularly strong. Two of the ten largest deals in the first half also went to Bavarian companies focused on battery solutions like Green Flexibility, and energy generation technologies such as those developed by Proxima Fusion.