Confidence in Germany as a startup hub is slipping. According to the latest Startup Monitor published by the German Startup Association and the Ifo Institute, only 57% of founders now view Germany positively, down four percentage points from last year.
Paradoxically, Germany’s relative standing has improved compared to the United States — largely because of uncertainty and tariffs under Donald Trump’s administration.
Fewer founders would start again
Fewer entrepreneurs would choose to launch again in Germany: only 78% said yes, down from 84% in 2024 and nearly 90% in 2023.
Experts warn that if enthusiasm among active founders declines further, it may weaken Germany’s long-term innovation capacity.
Germany gains edge over the US
Almost 40% of German founders now consider their home country more attractive than the US, a six-point rise from last year.
“America’s current political course works in our favor,” said Verena Pausder, chair of the Startup Association. She stressed the need to seize this moment to reduce technological dependency.
Unpredictable US politics and protectionist tariffs are seen as risks, while Germany appears comparatively stable.
Strength: Universities and research ties
Founders praise Germany’s strong ties to universities and research institutes, which provide talent and innovation partnerships.
Yet bureaucracy, slow administrative procedures and weak venture capital access remain persistent weaknesses, making France and other European peers appear more competitive.
Weakness: Venture capital access
Germany ranks only 18th out of the world’s 40 largest economies in VC access.
“We need to finally mobilize more capital,” Pausder urged, warning that without stronger funding streams, Germany risks losing momentum.
Boom in defense tech
One exception: defense technology startups. Investments jumped from just €1.3 million in 2020 to nearly €878.5 million in the first eight months of 2025, reflecting geopolitical tensions and growing defense budgets.
Methodology
The 2025 Startup Monitor is based on 1,846 online surveys. While not fully representative, it offers one of the clearest snapshots of sentiment among German entrepreneurs.
Founders Are Flocking Back to Germany Despite Bureaucracy
Germany’s startup scene is at a crossroads: domestic confidence is weakening, yet international comparison makes the country look stronger.
If policymakers can reduce bureaucracy and expand capital access while leveraging strengths like universities, Germany could still turn current challenges into an advantage.
