Scaleups in Germany a $5 Billion Ecosystem

A new SEP Monitor outlining the German scaleup ecosystem was presented today at the SEP Matching Event hosted by Startup Europe Summit at Factory Berlin. Over 200 ICT startups in Germany broke the early-stage level in the last four years and raised more than $4.3 billion: over 50% raised between $500,000 and $5 million, while a notable 3% – the new “scalers” – raised over $100 million. An additional $700 million was collected via IPOs for a cumulative total of $5 billion. 110 total exits: about 40% completed by U.S. buyers, 30% by German companies. Software, e-commerce and mobile account for the majority of scaleups.

Berlin, February 12, 2015 — Startup Europe Partnership (SEP) today presented a new edition of Monitor that includes preliminary results on the German ICT startup and scaleup ecosystem. SEP identified and analysed 218 ICT startups that were able to raise more than $500,000 in the last four years for total of $4.3 billion,plus $700 million gained via an initial public stock offering, for a cumulative total of $5 billion. Hosted by Startup Europe Summit, the presentation was made at the SEP Matching Event held at Factory Berlin.

After previously analysing UK, France, Italy and Spain, in this SEP Monitor we also mapped Germany,” explained Alberto Onetti, Coordinator of SEP. “Though data are still preliminary, the German startup ecosystem appears to be in an intermediate position between the UK, by far the most advanced ecosystem in Europe, and France. Spain and Italy remain fairly distant. The main differences are in terms of number of scaleups and available capital. The UK has double the scaleups of Germany and France, and four times more than the Mediterranean countries. In the last four-year period, UK scaleups raised respectively about 1.8 times and 3.5 times more financing than their German and French colleagues. For Germany the main gap to be closed is financing access on the stock market; while in terms of capital raised through venture capital, the difference is minimal.

 

Capital Raised in the German ICT Startup Ecosystem

The majority (52%) of the analysed startups raised between $500,000 and $5 million; 33% were backed by funding between $5 million and $20 million, while 10% with funding between $20 million and $50 million. 2% of the scaleups raised between $50 million and $100 million. Finally, 3% raised over $100 million and turned into “scalers.” These last seven companies, the “new German scalers,” are Delivery Hero, Zalando, BigPoint, HelloFresh, Dalani/WestWing,SoundCloud and Foodpanda/Hellofood, which respectively raised $1.2 billion, $943 million, $461 million, $216 million, $179 million, $123 million and $108 million. Other notable German scaleups are Wimdu ($90 million) and Mister Spex ($40 million).

 

IPOs

$700 million have been collected on the stock market via an initial public offering (IPO). The most notable company that went public since 2011 is Zalando ($700 million capital raised at a $6.8 billion valuation). Zalando is a multinational e-commerce company specialized in selling shoes, clothing and other fashion and lifestyle products online. The Berlin company was founded in 2008, and since then has expanded to offer its retail services in a total of 14 European countries. In October last year, Zalando priced its IPO near the top end of its range, valuing the company at $6.8 billion.

 

Acquisitions

In Germany 109 acquisitions were reported since 2011: 34 (31%) of German startup acquisitions were accomplished by German companies, while 40 (37%) were completed by US companies. 28 acquisitions (26%), however, remained in Europe (10% in UK), and 7 (6%) floated to other parts of the world. The number has been rather stable from 2011-2014, with a slight decrease in 2012: 29 acquisitions in 2011, 15 in 2012, 26 in 2013 and 39 in 2014.

The most significant acquisitions (with disclosed valuation) were Trivago (Expedia, $632 million, 2013), Zong (eBay, $240 million, 2011), Fyber (RNTS Media, $190 million, 2014), Mytheresa (Neiman Marcus, $180 million, 2014), Sofort (Klarna, $150 million, 2013), and Voxeo (Aspect Software, $150 million, 2013).

Areas and Markets

Software solutions and e-commerce are the most relevant sectors in Germany, accounting respectively for 18% and 15% of all mapped scaleups. Third position for the mobile sector, which attracts about 11% of the companies, is closely followed by enterprise services (10%) and the advertising sector (9%). Social and hospitality segments equally appeal to 6% of identified companies.