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Paris could soon overtake Berlin as a start-up location

Paris could soon overtake Berlin as a start-up location. Despite Brexit at number one, London remains.

Measured by invested risk capital, Berlin is still the second most important start-up stronghold in Europe after London. But the picture could change soon, according to an analysis published today by the consulting firm EY. Accordingly, Paris threatens to overtake the German capital: While Berlin start-up last year received twelve percent less fresh capital, investment in Paris increased by 39 percent.

The French capital is already ahead in terms of the number of transactions: a total of 366 start-up investments were counted in 2018, and 244 in Berlin. “French policy has a clear objective of making France a start- Developing nation number one in Europe, “says EY partner Peter Lennartz. Although there are fewer mega-transactions, the financing of start-ups is broader than in Germany.

From a founding perspective, the regulatory framework conditions are advantageous. These include EY a straightforward issuance of residence permits, cheap loans from the state and massive tax relief for founders and investors. “If Germany does not pay attention and does not do more for start-ups than before, our French neighbors will soon overtake us when it comes to financing start-ups,” warns Lennartz.

Bleak economic prospects without influence

Despite the upcoming Brexit in the first place stands London. 623 financings have been secured for companies that are not older than ten years. The total volume increased by 39 percent to five billion euros. The largest single financing of the year went to London-based luxury online retailer FarFetch, which raised € 583 million on its IPO.

The European start-up ecosystem is in good shape

Overall, the European start-up ecosystem is in good shape, according to the EY surveys. The total value of the start-up financing increased in 2018 compared to the previous year by eleven percent to 21.3 billion euros. The number of financing rounds increased by 15 percent to 4199. The positive trend remained unbroken in the second half of 2018 – even though the global economic outlook had deteriorated significantly.

Published inStartups

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