Start-ups in Paris overtake Berlin in investor money

Who starts a business, is usually dependent on venture capital of funds or companies. Start-ups in European capitals are doing equally well in terms of attracting such investors: while in London, according to an analysis by consulting firm EY, the undisputed cash flow was 5.7 billion euros in the first half of 2019, founders in Paris have around 2.2 Billions of euros raised by investors.

They overtook Berlin start-ups, who collected 2.0 billion euros. In 2017, Paris was still well behind Berlin, 2018 only just under. In the first half of 2019, Paris had its nose in the number of rounds of financing, ahead of Berlin with 129 laps. Again, London was ahead with 323.

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Billions of startupsThe unicorns are getting fatter

The government in France has a clear objective of making the country the leading start-up location in Europe, said EY partner Peter Lennartz. Bureaucratic hurdles for young entrepreneurs would be reduced and the state would bring investors and founders together. For example, President Emmanuel Macron personally solicited investments in domestic start-ups from major French companies in 2017.

KfW: Young start-ups are missing 600 million euros

By contrast, start-ups in Germany often find it difficult to obtain large sums of money. The development bank KfW estimates the financing gap in the early growth phase at up to 600 million euros per year. The Federal Government wants to promote the founding culture with state-supported venture capital funds and a platform for networking founders and investors.

Read here: How East Germany lures start-ups

Overall, European start-ups received the record sum of 16.9 billion euros in the first half of the year, 62 percent more than in the same period of the previous year. It is an enormous amount of capital in the market, which must be created, says EY. "Investors are focusing on more mature business models and companies that have proven they can achieve their goals," said EY partner Lennartz. In the second half of the year, the boom continued. In Germany, in particular, there was a strong third quarter - hope for Berlin.

"Unicorns" especially in China and the US

Most start-ups with a market value of more than a billion dollars, so-called unicorns, exist in China and the USA. According to the new Hurun report, there are 206 and 203 in the United States in the People's Republic. Worldwide, there are 494 such start-ups. However, the exact numbers are contested: another market research firm, Visual Capitalist, published its unicorn list in June - according to which there are only 94 of these startups in China and 156 in the US.

"China and the US dominate with more than 80 percent of the known unicorns, even though both countries account for only half of global gross domestic product and account for only a quarter of the population," said Hurun report chief Rupert Hoogewerf. "The rest of the world needs to wake up and create an environment where unicorns can thrive."