German Venture Capital Market Stable in 2025 Despite Economic Uncertainty

The German venture capital market maintained its level in 2025, with EUR 7.2 billion invested in domestic startups, according to KfW Research. This figure positions the market similarly to previous years, following EUR 7.4 billion in 2024 and EUR 7.1 billion in 2023. The final quarter of 2025 was the second strongest with EUR 2 billion in investments.

The artificial intelligence (AI) sector saw a record year in Germany, attracting approximately EUR 2.9 billion, which constitutes about two-fifths of the total investment volume. AI startups continued to be a major growth driver. The security sector also performed well, accounting for 17 percent of the invested volume, driven by demand for innovative security technologies amid geopolitical challenges.

Despite the stable investment volume, the momentum in the German VC market lags behind international peers like the UK, France, and especially the US. "The development of VC markets is also an expression of the uneven economic momentum in these countries," stated Dr. Dirk Schumacher, Chief Economist at KfW.

While the number of exits from VC investments increased to 164 in 2025 from 154 in the prior year, the valuations and proceeds from these exits have risen slowly over the past two years. A revival of the exit markets is considered crucial for a positive upswing in the coming years.

The number of funding rounds for German startups slightly decreased in 2025 compared to 2024. However, the average funding round size increased, indicating improved conditions for promising startups. Financing for scale-ups gained importance, representing 49 percent of the deal volume.