Berlin continues to thrive as a hub for start-ups, according to Giffey.
Berlin, known as the German startup capital, continues to lead the nation in terms of startup volume and diversity, despite Bavaria's recent surge in funding and startup creation.
Key reasons for Berlin's dominance include its larger ecosystem, strong investor presence, and a broader range of startup activities. In the first half of 2025, Berlin hosted nearly double the number of startups than Bavaria, raising around €1.5 billion.
Bavaria, on the other hand, has seen significant growth, with startups raising about €2.1 billion, thanks to a few large deals. This growth is particularly noticeable in research-driven sectors like health, bio, and defense technology (DefTech).
Berlin's startup ecosystem is historically larger and more mature, boasting a dense network of accelerators, investors, corporate partnerships, and service providers. Bavaria, especially Munich, benefits from its close ties to universities and research institutions, sophisticated startup labs like UnternehmerTUM, and increasing private investment.
In terms of sectoral focus, Berlin remains strong in software, AI, FinTech, and internet-driven startups, while Bavaria excels in sectors like industrial solutions, health, and bio. DefTech and AI sectors may see some regional specialization, with Bavaria having more DefTech and advanced tech startups, and Berlin focusing more on digital AI, FinTech, and health tech startups at scale.
Berlin's senator, Giffey, believes that the upcoming joint Bayer-Charité Campus in Berlin-Wedding will significantly boost the startup ecosystem in Berlin. The campus will house the Translation Center for Gene and Cell Therapies, further strengthening Berlin's position in the health sector.
Giffey also stated that many technology developments in Berlin have dual-use components that can also be applied to defense and security products. This shift towards DefTech is primarily due to the trend towards defense technology and the geopolitical situation.
Last year, 481 companies were newly founded in Berlin, which is more than double the number in Munich and over twenty times the number in Heidelberg. Berlin remains the city with the most investment rounds nationwide, with 132 such rounds for Berlin startups last year, compared to 76 in Bavaria.
The main focus for Berlin remains on artificial intelligence, health, finance, sustainability, and games. Large sums are being invested in DefTech and artificial intelligence due to the geopolitical situation. The state government is considering strengthening Berlin and the metropolitan region, particularly in DefTech.
Venture capital, which refers to equity investments in young, innovative, high-risk companies with high growth potential, continues to play a crucial role in both regions, attracting international investors and corporate venture capital.
In summary, Berlin's reputation as the startup capital persists due to its sheer ecosystem scale, investor diversity, and sector breadth, while Bavaria is catching up rapidly with strong growth in startup numbers and funding, especially in research-driven sectors like health, bio, and DefTech. Their investment landscapes differ mainly in startup volume and maturity (Berlin) versus research integration and corporate VC presence (Bavaria).
In the first half of 2025, Berlin's dominance in the startup scene was evident as it hosted nearly double the number of startups than Bavaria, raising around €1.5 billion, with a focus on sectors such as finance, software, AI, FinTech, and internet-driven startups. On the other hand, Bavaria, particularly Munich, shows significant growth in research-driven sectors like health, bio, and defense technology (DefTech), thanks to its close ties to universities and research institutions, and increasing private investment.
