Investing in Germany and France in 2023: what happened beyond AI?
Investing in Germany and France in 2023: what happened beyond AI?
A deep dive into the raw figures and expert analysis of French and German investment reveal insightful trajectories and potential forecasts for the tech industry in 2024, especially around AI.
For years, France and Germany have displayed friendship and alignment while nurturing a healthy economic competition. Dothey still have so much in common when it comes to their startups ecosystems?
IRIS, leading European tech Venture and Growth investor, conducted a comparative study over 2023. It brings to light the nuanced investment trends and dynamics in France and Germany, revealing a complex tapestry of economic shifts, industry trends, and strategic realignments. In an era where the European market often benchmarks itself with the US, a deep dive into the raw figures and expert analysis of French and German investment reveal insightful trajectories and potential forecasts for the tech industry in 2024, especially around Artificial Intelligence.
A Shift in Investment Patterns: France's AI Bubble vs. Germany's Market Consolidation
Since 2022, both nations have experienced a discernible downtrend in investment activities, with France witnessing a 49% decrease in total investment amounts and Germany a 45% reduction. This contraction is further reflected in the number of funding rounds,decreasing by 12% in France and 22% in Germany, displaying a notably cautious investment climate.
Conversely, German investments came back across various sectors, bouncing back from a major drop in 2022. This new financing environment aligns with a broader interest in diverse industries and technologies such as Health, Foodtech, Sustainability and AI, signaling a robust and balanced market revitalization. Despite the overall contraction in investment activities, 2023 was still a very active year in France: both total investment volume and number of funding rounds are bigger than in Germany, signaling a crucial realignment of investment preferences but not the end of an era (yet).
France experienced a nuanced downturn in investment activities during the year, with the major exception of the very competitive AI field, underscoring the strategic importance and growing confidence in AI technologies within the French investment market. But as French people say, “it’s the tree hiding the forest”: if you withdraw investments in AI from the total investment volume, the total drops massively.
A retrospective glance offers further insight: Germany reached its tech investment apogee in 2021 with a formidable $19.7 billion injected in startups and scaleups, while France's peak followed in 2022, amassing $13.3 billion.
These milestones signify the oscillating cycles of investment growth and consolidation depending on the country:
- the emergence of AI technologies as a focal point of investment activity commands attention: in Germany, AI-based startups raised four out of the top ten funding rounds (6 out of 10 in France), underscoring the strategic importance of this tech in future investment paradigms
- the distinct market dynamics in France: despite a global deceleration, AI investments are still top of minds and charts, suggesting a deliberate investment pivot towards emerging technologies
- Germany's investment climate, after the meteoric rise and fall of B2C unicorns, appears to be recalibrating towards 2021’s healthy spread, with hardware and SaaS back in trends.
"We need a dynamic and rich ecosystem consisting of startups, established companies and well interconnected scientific and research environment on both sides of the Rhine in order to expand the resilience of our countries' economies and secure Europe's technological sovereignty. Consistent and sustainable funding of these young and often financially vulnerable companies from the public and private sector is an essential component for long-term success. With the French-German Tech Lab, the French-German Chamber of Industry and Commerce is proactively fostering French-German cooperation in the field of technology and innovation," said Patrick Brandmaier, Managing Director of the French-German Chamber of Industry and Commerce
The study also reveals a decrease in the number of funding rounds in Germany but many key local investors participated in leading funding rounds: indeed, most major rounds are dominated by corporate investors such as SAP, Porsche SE and local Growth firms, whereas in France, Bpifrance and US VC and PE funds, particularly those with an AI focus, lead many investment rounds.
As for the industries covered, German fundings tend to go to Green Energy, Sustainability, AI, SaaS and Fintech, with a diversified yet focused approach. In France, the split between AI investments and other topics such as Sustainability or industry is unmissable: 6 out of 10 top investments in 2023 went to AI companies, including 2 just to Mistral AI.
Looking at IPOs in France and Germany in 2023, not a single one was a tech company. In contrast, acquisitions and buyout amounts are considerably higher in Germany than in France, with a marked appetite for technology projects like the acquisition of LeanIX by SAP.
The final finding of the study is about unicorns, where they come from, how long it takes them to reach the stageand to keep it up. Many startups that became unicorns in less than 5 years now seem to feel a sudden rock in their boat, questioning the importance of raising and growing at a measured path while still keeping an eye on competition and their means to stay on top of the trend.
Key facts:
- Investment volumes drop: France saw a 45% decrease between 2022 and 2023, while Germany experienced a 40%reduction.
- Falling number of investment rounds: there was a 17% decrease in France and a 25% decrease in Germany.
- Hints of an AI bubble in France: despite a recent peak in investments in 2022, there was still no massive drop, indicating sustained interest in AI.
- Most popular industries in Germany: Sustainability, SaaS and AI stand out as the most popular industries for investment.
- Most popular industries in France: AI, sustainability/energy, and to a lesser extent, Fintech, dominate the investment landscape.
- German corporates are active actors of the tech ecosystem as funds of funds, direct investors and potential acquirers, contrasting with French corporates, which are almost unseeable in the market versus US VC/PE and tech acquirers.
- In 2022 and 2023, German unicorns took approximately 6.7 years to reach unicorn status, showcasing a mix of B2C (60%) and B2B orientations, with a significant tilt towards B2B enterprises. In total, Germany registered 50 unicorns.
- Similarly, in France, it took an average of 7.4 years for startups to become unicorns, with a balanced distribution between B2B and B2C, yet with a pronounced emphasis on B2B solutions (63%), underscoring the strategic drive towards enterprise-oriented innovations within the French tech landscape. In total, France registered 29 unicorns.
About IRIS
IRIS is a European Venture and Growth firm specialized in tech, investing in seed, Series A, late stage, and growth. With offices and teams in Berlin, Munich and Paris and a keen understanding of their markets and a robust international network, IRIS is a selective partner to the upcoming scale-ups and tech giants, helping them increase their visibility, business reach, and impact across the world. IRIS investments include, among others, companies such as Adjust, Braincube, Cohort, Escape, Exotec, Forto, Kyriba, Jedox, LeanIX, Lumapps, Lookout, Red Points, Shift, Spinergie, SurePay, Talend, Talon.one, WeeFin, Workpath and Zeta Global. For more information, visit www.iris.vc
About The French-German Chamber of Commerce
The French-German Chamber of Commerce, part of the international ecosystems ofGerman Chambers abroad (150 Chambers and delegations in 93 countries), has been fostering business between France and Germany for nearly 70 years. Thanks to its network and its nearly 1000 members ranging from major industrial corporates to SMEs and startups, it is today a key platform of the French-German business landscape. Its staff, based in Paris and Berlin, provides customized advice and services to German and French companies, supporting the successful establishment and expansion of their international business activities. Visit: www.francoallemand.com
For years, France and Germany have displayed friendship and alignment while nurturing a healthy economic competition. Dothey still have so much in common when it comes to their startups ecosystems?
IRIS, leading European tech Venture and Growth investor, conducted a comparative study over 2023. It brings to light the nuanced investment trends and dynamics in France and Germany, revealing a complex tapestry of economic shifts, industry trends, and strategic realignments. In an era where the European market often benchmarks itself with the US, a deep dive into the raw figures and expert analysis of French and German investment reveal insightful trajectories and potential forecasts for the tech industry in 2024, especially around Artificial Intelligence.
A Shift in Investment Patterns: France's AI Bubble vs. Germany's Market Consolidation
Since 2022, both nations have experienced a discernible downtrend in investment activities, with France witnessing a 49% decrease in total investment amounts and Germany a 45% reduction. This contraction is further reflected in the number of funding rounds,decreasing by 12% in France and 22% in Germany, displaying a notably cautious investment climate.
Conversely, German investments came back across various sectors, bouncing back from a major drop in 2022. This new financing environment aligns with a broader interest in diverse industries and technologies such as Health, Foodtech, Sustainability and AI, signaling a robust and balanced market revitalization. Despite the overall contraction in investment activities, 2023 was still a very active year in France: both total investment volume and number of funding rounds are bigger than in Germany, signaling a crucial realignment of investment preferences but not the end of an era (yet).
France experienced a nuanced downturn in investment activities during the year, with the major exception of the very competitive AI field, underscoring the strategic importance and growing confidence in AI technologies within the French investment market. But as French people say, “it’s the tree hiding the forest”: if you withdraw investments in AI from the total investment volume, the total drops massively.
A retrospective glance offers further insight: Germany reached its tech investment apogee in 2021 with a formidable $19.7 billion injected in startups and scaleups, while France's peak followed in 2022, amassing $13.3 billion.
These milestones signify the oscillating cycles of investment growth and consolidation depending on the country:
- the emergence of AI technologies as a focal point of investment activity commands attention: in Germany, AI-based startups raised four out of the top ten funding rounds (6 out of 10 in France), underscoring the strategic importance of this tech in future investment paradigms
- the distinct market dynamics in France: despite a global deceleration, AI investments are still top of minds and charts, suggesting a deliberate investment pivot towards emerging technologies
- Germany's investment climate, after the meteoric rise and fall of B2C unicorns, appears to be recalibrating towards 2021’s healthy spread, with hardware and SaaS back in trends.
"We need a dynamic and rich ecosystem consisting of startups, established companies and well interconnected scientific and research environment on both sides of the Rhine in order to expand the resilience of our countries' economies and secure Europe's technological sovereignty. Consistent and sustainable funding of these young and often financially vulnerable companies from the public and private sector is an essential component for long-term success. With the French-German Tech Lab, the French-German Chamber of Industry and Commerce is proactively fostering French-German cooperation in the field of technology and innovation," said Patrick Brandmaier, Managing Director of the French-German Chamber of Industry and Commerce
The study also reveals a decrease in the number of funding rounds in Germany but many key local investors participated in leading funding rounds: indeed, most major rounds are dominated by corporate investors such as SAP, Porsche SE and local Growth firms, whereas in France, Bpifrance and US VC and PE funds, particularly those with an AI focus, lead many investment rounds.
As for the industries covered, German fundings tend to go to Green Energy, Sustainability, AI, SaaS and Fintech, with a diversified yet focused approach. In France, the split between AI investments and other topics such as Sustainability or industry is unmissable: 6 out of 10 top investments in 2023 went to AI companies, including 2 just to Mistral AI.
Looking at IPOs in France and Germany in 2023, not a single one was a tech company. In contrast, acquisitions and buyout amounts are considerably higher in Germany than in France, with a marked appetite for technology projects like the acquisition of LeanIX by SAP.
The final finding of the study is about unicorns, where they come from, how long it takes them to reach the stageand to keep it up. Many startups that became unicorns in less than 5 years now seem to feel a sudden rock in their boat, questioning the importance of raising and growing at a measured path while still keeping an eye on competition and their means to stay on top of the trend.
Key facts:
- Investment volumes drop: France saw a 45% decrease between 2022 and 2023, while Germany experienced a 40%reduction.
- Falling number of investment rounds: there was a 17% decrease in France and a 25% decrease in Germany.
- Hints of an AI bubble in France: despite a recent peak in investments in 2022, there was still no massive drop, indicating sustained interest in AI.
- Most popular industries in Germany: Sustainability, SaaS and AI stand out as the most popular industries for investment.
- Most popular industries in France: AI, sustainability/energy, and to a lesser extent, Fintech, dominate the investment landscape.
- German corporates are active actors of the tech ecosystem as funds of funds, direct investors and potential acquirers, contrasting with French corporates, which are almost unseeable in the market versus US VC/PE and tech acquirers.
- In 2022 and 2023, German unicorns took approximately 6.7 years to reach unicorn status, showcasing a mix of B2C (60%) and B2B orientations, with a significant tilt towards B2B enterprises. In total, Germany registered 50 unicorns.
- Similarly, in France, it took an average of 7.4 years for startups to become unicorns, with a balanced distribution between B2B and B2C, yet with a pronounced emphasis on B2B solutions (63%), underscoring the strategic drive towards enterprise-oriented innovations within the French tech landscape. In total, France registered 29 unicorns.
About IRIS
IRIS is a European Venture and Growth firm specialized in tech, investing in seed, Series A, late stage, and growth. With offices and teams in Berlin, Munich and Paris and a keen understanding of their markets and a robust international network, IRIS is a selective partner to the upcoming scale-ups and tech giants, helping them increase their visibility, business reach, and impact across the world. IRIS investments include, among others, companies such as Adjust, Braincube, Cohort, Escape, Exotec, Forto, Kyriba, Jedox, LeanIX, Lumapps, Lookout, Red Points, Shift, Spinergie, SurePay, Talend, Talon.one, WeeFin, Workpath and Zeta Global. For more information, visit www.iris.vc
About The French-German Chamber of Commerce
The French-German Chamber of Commerce, part of the international ecosystems ofGerman Chambers abroad (150 Chambers and delegations in 93 countries), has been fostering business between France and Germany for nearly 70 years. Thanks to its network and its nearly 1000 members ranging from major industrial corporates to SMEs and startups, it is today a key platform of the French-German business landscape. Its staff, based in Paris and Berlin, provides customized advice and services to German and French companies, supporting the successful establishment and expansion of their international business activities. Visit: www.francoallemand.com
For years, France and Germany have displayed friendship and alignment while nurturing a healthy economic competition. Dothey still have so much in common when it comes to their startups ecosystems?
IRIS, leading European tech Venture and Growth investor, conducted a comparative study over 2023. It brings to light the nuanced investment trends and dynamics in France and Germany, revealing a complex tapestry of economic shifts, industry trends, and strategic realignments. In an era where the European market often benchmarks itself with the US, a deep dive into the raw figures and expert analysis of French and German investment reveal insightful trajectories and potential forecasts for the tech industry in 2024, especially around Artificial Intelligence.
A Shift in Investment Patterns: France's AI Bubble vs. Germany's Market Consolidation
Since 2022, both nations have experienced a discernible downtrend in investment activities, with France witnessing a 49% decrease in total investment amounts and Germany a 45% reduction. This contraction is further reflected in the number of funding rounds,decreasing by 12% in France and 22% in Germany, displaying a notably cautious investment climate.
Conversely, German investments came back across various sectors, bouncing back from a major drop in 2022. This new financing environment aligns with a broader interest in diverse industries and technologies such as Health, Foodtech, Sustainability and AI, signaling a robust and balanced market revitalization. Despite the overall contraction in investment activities, 2023 was still a very active year in France: both total investment volume and number of funding rounds are bigger than in Germany, signaling a crucial realignment of investment preferences but not the end of an era (yet).
France experienced a nuanced downturn in investment activities during the year, with the major exception of the very competitive AI field, underscoring the strategic importance and growing confidence in AI technologies within the French investment market. But as French people say, “it’s the tree hiding the forest”: if you withdraw investments in AI from the total investment volume, the total drops massively.
A retrospective glance offers further insight: Germany reached its tech investment apogee in 2021 with a formidable $19.7 billion injected in startups and scaleups, while France's peak followed in 2022, amassing $13.3 billion.
These milestones signify the oscillating cycles of investment growth and consolidation depending on the country:
- the emergence of AI technologies as a focal point of investment activity commands attention: in Germany, AI-based startups raised four out of the top ten funding rounds (6 out of 10 in France), underscoring the strategic importance of this tech in future investment paradigms
- the distinct market dynamics in France: despite a global deceleration, AI investments are still top of minds and charts, suggesting a deliberate investment pivot towards emerging technologies
- Germany's investment climate, after the meteoric rise and fall of B2C unicorns, appears to be recalibrating towards 2021’s healthy spread, with hardware and SaaS back in trends.
"We need a dynamic and rich ecosystem consisting of startups, established companies and well interconnected scientific and research environment on both sides of the Rhine in order to expand the resilience of our countries' economies and secure Europe's technological sovereignty. Consistent and sustainable funding of these young and often financially vulnerable companies from the public and private sector is an essential component for long-term success. With the French-German Tech Lab, the French-German Chamber of Industry and Commerce is proactively fostering French-German cooperation in the field of technology and innovation," said Patrick Brandmaier, Managing Director of the French-German Chamber of Industry and Commerce
The study also reveals a decrease in the number of funding rounds in Germany but many key local investors participated in leading funding rounds: indeed, most major rounds are dominated by corporate investors such as SAP, Porsche SE and local Growth firms, whereas in France, Bpifrance and US VC and PE funds, particularly those with an AI focus, lead many investment rounds.
As for the industries covered, German fundings tend to go to Green Energy, Sustainability, AI, SaaS and Fintech, with a diversified yet focused approach. In France, the split between AI investments and other topics such as Sustainability or industry is unmissable: 6 out of 10 top investments in 2023 went to AI companies, including 2 just to Mistral AI.
Looking at IPOs in France and Germany in 2023, not a single one was a tech company. In contrast, acquisitions and buyout amounts are considerably higher in Germany than in France, with a marked appetite for technology projects like the acquisition of LeanIX by SAP.
The final finding of the study is about unicorns, where they come from, how long it takes them to reach the stageand to keep it up. Many startups that became unicorns in less than 5 years now seem to feel a sudden rock in their boat, questioning the importance of raising and growing at a measured path while still keeping an eye on competition and their means to stay on top of the trend.
Key facts:
- Investment volumes drop: France saw a 45% decrease between 2022 and 2023, while Germany experienced a 40%reduction.
- Falling number of investment rounds: there was a 17% decrease in France and a 25% decrease in Germany.
- Hints of an AI bubble in France: despite a recent peak in investments in 2022, there was still no massive drop, indicating sustained interest in AI.
- Most popular industries in Germany: Sustainability, SaaS and AI stand out as the most popular industries for investment.
- Most popular industries in France: AI, sustainability/energy, and to a lesser extent, Fintech, dominate the investment landscape.
- German corporates are active actors of the tech ecosystem as funds of funds, direct investors and potential acquirers, contrasting with French corporates, which are almost unseeable in the market versus US VC/PE and tech acquirers.
- In 2022 and 2023, German unicorns took approximately 6.7 years to reach unicorn status, showcasing a mix of B2C (60%) and B2B orientations, with a significant tilt towards B2B enterprises. In total, Germany registered 50 unicorns.
- Similarly, in France, it took an average of 7.4 years for startups to become unicorns, with a balanced distribution between B2B and B2C, yet with a pronounced emphasis on B2B solutions (63%), underscoring the strategic drive towards enterprise-oriented innovations within the French tech landscape. In total, France registered 29 unicorns.
About IRIS
IRIS is a European Venture and Growth firm specialized in tech, investing in seed, Series A, late stage, and growth. With offices and teams in Berlin, Munich and Paris and a keen understanding of their markets and a robust international network, IRIS is a selective partner to the upcoming scale-ups and tech giants, helping them increase their visibility, business reach, and impact across the world. IRIS investments include, among others, companies such as Adjust, Braincube, Cohort, Escape, Exotec, Forto, Kyriba, Jedox, LeanIX, Lumapps, Lookout, Red Points, Shift, Spinergie, SurePay, Talend, Talon.one, WeeFin, Workpath and Zeta Global. For more information, visit www.iris.vc
About The French-German Chamber of Commerce
The French-German Chamber of Commerce, part of the international ecosystems ofGerman Chambers abroad (150 Chambers and delegations in 93 countries), has been fostering business between France and Germany for nearly 70 years. Thanks to its network and its nearly 1000 members ranging from major industrial corporates to SMEs and startups, it is today a key platform of the French-German business landscape. Its staff, based in Paris and Berlin, provides customized advice and services to German and French companies, supporting the successful establishment and expansion of their international business activities. Visit: www.francoallemand.com
Investing in Germany and France in 2023: what happened beyond AI?
A deep dive into the raw figures and expert analysis of French and German investment reveal insightful trajectories and potential forecasts for the tech industry in 2024, especially around AI.
For years, France and Germany have displayed friendship and alignment while nurturing a healthy economic competition. Dothey still have so much in common when it comes to their startups ecosystems?
IRIS, leading European tech Venture and Growth investor, conducted a comparative study over 2023. It brings to light the nuanced investment trends and dynamics in France and Germany, revealing a complex tapestry of economic shifts, industry trends, and strategic realignments. In an era where the European market often benchmarks itself with the US, a deep dive into the raw figures and expert analysis of French and German investment reveal insightful trajectories and potential forecasts for the tech industry in 2024, especially around Artificial Intelligence.
A Shift in Investment Patterns: France's AI Bubble vs. Germany's Market Consolidation
Since 2022, both nations have experienced a discernible downtrend in investment activities, with France witnessing a 49% decrease in total investment amounts and Germany a 45% reduction. This contraction is further reflected in the number of funding rounds,decreasing by 12% in France and 22% in Germany, displaying a notably cautious investment climate.
Conversely, German investments came back across various sectors, bouncing back from a major drop in 2022. This new financing environment aligns with a broader interest in diverse industries and technologies such as Health, Foodtech, Sustainability and AI, signaling a robust and balanced market revitalization. Despite the overall contraction in investment activities, 2023 was still a very active year in France: both total investment volume and number of funding rounds are bigger than in Germany, signaling a crucial realignment of investment preferences but not the end of an era (yet).
France experienced a nuanced downturn in investment activities during the year, with the major exception of the very competitive AI field, underscoring the strategic importance and growing confidence in AI technologies within the French investment market. But as French people say, “it’s the tree hiding the forest”: if you withdraw investments in AI from the total investment volume, the total drops massively.
A retrospective glance offers further insight: Germany reached its tech investment apogee in 2021 with a formidable $19.7 billion injected in startups and scaleups, while France's peak followed in 2022, amassing $13.3 billion.
These milestones signify the oscillating cycles of investment growth and consolidation depending on the country:
- the emergence of AI technologies as a focal point of investment activity commands attention: in Germany, AI-based startups raised four out of the top ten funding rounds (6 out of 10 in France), underscoring the strategic importance of this tech in future investment paradigms
- the distinct market dynamics in France: despite a global deceleration, AI investments are still top of minds and charts, suggesting a deliberate investment pivot towards emerging technologies
- Germany's investment climate, after the meteoric rise and fall of B2C unicorns, appears to be recalibrating towards 2021’s healthy spread, with hardware and SaaS back in trends.
"We need a dynamic and rich ecosystem consisting of startups, established companies and well interconnected scientific and research environment on both sides of the Rhine in order to expand the resilience of our countries' economies and secure Europe's technological sovereignty. Consistent and sustainable funding of these young and often financially vulnerable companies from the public and private sector is an essential component for long-term success. With the French-German Tech Lab, the French-German Chamber of Industry and Commerce is proactively fostering French-German cooperation in the field of technology and innovation," said Patrick Brandmaier, Managing Director of the French-German Chamber of Industry and Commerce
The study also reveals a decrease in the number of funding rounds in Germany but many key local investors participated in leading funding rounds: indeed, most major rounds are dominated by corporate investors such as SAP, Porsche SE and local Growth firms, whereas in France, Bpifrance and US VC and PE funds, particularly those with an AI focus, lead many investment rounds.
As for the industries covered, German fundings tend to go to Green Energy, Sustainability, AI, SaaS and Fintech, with a diversified yet focused approach. In France, the split between AI investments and other topics such as Sustainability or industry is unmissable: 6 out of 10 top investments in 2023 went to AI companies, including 2 just to Mistral AI.
Looking at IPOs in France and Germany in 2023, not a single one was a tech company. In contrast, acquisitions and buyout amounts are considerably higher in Germany than in France, with a marked appetite for technology projects like the acquisition of LeanIX by SAP.
The final finding of the study is about unicorns, where they come from, how long it takes them to reach the stageand to keep it up. Many startups that became unicorns in less than 5 years now seem to feel a sudden rock in their boat, questioning the importance of raising and growing at a measured path while still keeping an eye on competition and their means to stay on top of the trend.
Key facts:
- Investment volumes drop: France saw a 45% decrease between 2022 and 2023, while Germany experienced a 40%reduction.
- Falling number of investment rounds: there was a 17% decrease in France and a 25% decrease in Germany.
- Hints of an AI bubble in France: despite a recent peak in investments in 2022, there was still no massive drop, indicating sustained interest in AI.
- Most popular industries in Germany: Sustainability, SaaS and AI stand out as the most popular industries for investment.
- Most popular industries in France: AI, sustainability/energy, and to a lesser extent, Fintech, dominate the investment landscape.
- German corporates are active actors of the tech ecosystem as funds of funds, direct investors and potential acquirers, contrasting with French corporates, which are almost unseeable in the market versus US VC/PE and tech acquirers.
- In 2022 and 2023, German unicorns took approximately 6.7 years to reach unicorn status, showcasing a mix of B2C (60%) and B2B orientations, with a significant tilt towards B2B enterprises. In total, Germany registered 50 unicorns.
- Similarly, in France, it took an average of 7.4 years for startups to become unicorns, with a balanced distribution between B2B and B2C, yet with a pronounced emphasis on B2B solutions (63%), underscoring the strategic drive towards enterprise-oriented innovations within the French tech landscape. In total, France registered 29 unicorns.
About IRIS
IRIS is a European Venture and Growth firm specialized in tech, investing in seed, Series A, late stage, and growth. With offices and teams in Berlin, Munich and Paris and a keen understanding of their markets and a robust international network, IRIS is a selective partner to the upcoming scale-ups and tech giants, helping them increase their visibility, business reach, and impact across the world. IRIS investments include, among others, companies such as Adjust, Braincube, Cohort, Escape, Exotec, Forto, Kyriba, Jedox, LeanIX, Lumapps, Lookout, Red Points, Shift, Spinergie, SurePay, Talend, Talon.one, WeeFin, Workpath and Zeta Global. For more information, visit www.iris.vc
About The French-German Chamber of Commerce
The French-German Chamber of Commerce, part of the international ecosystems ofGerman Chambers abroad (150 Chambers and delegations in 93 countries), has been fostering business between France and Germany for nearly 70 years. Thanks to its network and its nearly 1000 members ranging from major industrial corporates to SMEs and startups, it is today a key platform of the French-German business landscape. Its staff, based in Paris and Berlin, provides customized advice and services to German and French companies, supporting the successful establishment and expansion of their international business activities. Visit: www.francoallemand.com
For years, France and Germany have displayed friendship and alignment while nurturing a healthy economic competition. Dothey still have so much in common when it comes to their startups ecosystems?
IRIS, leading European tech Venture and Growth investor, conducted a comparative study over 2023. It brings to light the nuanced investment trends and dynamics in France and Germany, revealing a complex tapestry of economic shifts, industry trends, and strategic realignments. In an era where the European market often benchmarks itself with the US, a deep dive into the raw figures and expert analysis of French and German investment reveal insightful trajectories and potential forecasts for the tech industry in 2024, especially around Artificial Intelligence.
A Shift in Investment Patterns: France's AI Bubble vs. Germany's Market Consolidation
Since 2022, both nations have experienced a discernible downtrend in investment activities, with France witnessing a 49% decrease in total investment amounts and Germany a 45% reduction. This contraction is further reflected in the number of funding rounds,decreasing by 12% in France and 22% in Germany, displaying a notably cautious investment climate.
Conversely, German investments came back across various sectors, bouncing back from a major drop in 2022. This new financing environment aligns with a broader interest in diverse industries and technologies such as Health, Foodtech, Sustainability and AI, signaling a robust and balanced market revitalization. Despite the overall contraction in investment activities, 2023 was still a very active year in France: both total investment volume and number of funding rounds are bigger than in Germany, signaling a crucial realignment of investment preferences but not the end of an era (yet).
France experienced a nuanced downturn in investment activities during the year, with the major exception of the very competitive AI field, underscoring the strategic importance and growing confidence in AI technologies within the French investment market. But as French people say, “it’s the tree hiding the forest”: if you withdraw investments in AI from the total investment volume, the total drops massively.
A retrospective glance offers further insight: Germany reached its tech investment apogee in 2021 with a formidable $19.7 billion injected in startups and scaleups, while France's peak followed in 2022, amassing $13.3 billion.
These milestones signify the oscillating cycles of investment growth and consolidation depending on the country:
- the emergence of AI technologies as a focal point of investment activity commands attention: in Germany, AI-based startups raised four out of the top ten funding rounds (6 out of 10 in France), underscoring the strategic importance of this tech in future investment paradigms
- the distinct market dynamics in France: despite a global deceleration, AI investments are still top of minds and charts, suggesting a deliberate investment pivot towards emerging technologies
- Germany's investment climate, after the meteoric rise and fall of B2C unicorns, appears to be recalibrating towards 2021’s healthy spread, with hardware and SaaS back in trends.
"We need a dynamic and rich ecosystem consisting of startups, established companies and well interconnected scientific and research environment on both sides of the Rhine in order to expand the resilience of our countries' economies and secure Europe's technological sovereignty. Consistent and sustainable funding of these young and often financially vulnerable companies from the public and private sector is an essential component for long-term success. With the French-German Tech Lab, the French-German Chamber of Industry and Commerce is proactively fostering French-German cooperation in the field of technology and innovation," said Patrick Brandmaier, Managing Director of the French-German Chamber of Industry and Commerce
The study also reveals a decrease in the number of funding rounds in Germany but many key local investors participated in leading funding rounds: indeed, most major rounds are dominated by corporate investors such as SAP, Porsche SE and local Growth firms, whereas in France, Bpifrance and US VC and PE funds, particularly those with an AI focus, lead many investment rounds.
As for the industries covered, German fundings tend to go to Green Energy, Sustainability, AI, SaaS and Fintech, with a diversified yet focused approach. In France, the split between AI investments and other topics such as Sustainability or industry is unmissable: 6 out of 10 top investments in 2023 went to AI companies, including 2 just to Mistral AI.
Looking at IPOs in France and Germany in 2023, not a single one was a tech company. In contrast, acquisitions and buyout amounts are considerably higher in Germany than in France, with a marked appetite for technology projects like the acquisition of LeanIX by SAP.
The final finding of the study is about unicorns, where they come from, how long it takes them to reach the stageand to keep it up. Many startups that became unicorns in less than 5 years now seem to feel a sudden rock in their boat, questioning the importance of raising and growing at a measured path while still keeping an eye on competition and their means to stay on top of the trend.
Key facts:
- Investment volumes drop: France saw a 45% decrease between 2022 and 2023, while Germany experienced a 40%reduction.
- Falling number of investment rounds: there was a 17% decrease in France and a 25% decrease in Germany.
- Hints of an AI bubble in France: despite a recent peak in investments in 2022, there was still no massive drop, indicating sustained interest in AI.
- Most popular industries in Germany: Sustainability, SaaS and AI stand out as the most popular industries for investment.
- Most popular industries in France: AI, sustainability/energy, and to a lesser extent, Fintech, dominate the investment landscape.
- German corporates are active actors of the tech ecosystem as funds of funds, direct investors and potential acquirers, contrasting with French corporates, which are almost unseeable in the market versus US VC/PE and tech acquirers.
- In 2022 and 2023, German unicorns took approximately 6.7 years to reach unicorn status, showcasing a mix of B2C (60%) and B2B orientations, with a significant tilt towards B2B enterprises. In total, Germany registered 50 unicorns.
- Similarly, in France, it took an average of 7.4 years for startups to become unicorns, with a balanced distribution between B2B and B2C, yet with a pronounced emphasis on B2B solutions (63%), underscoring the strategic drive towards enterprise-oriented innovations within the French tech landscape. In total, France registered 29 unicorns.
About IRIS
IRIS is a European Venture and Growth firm specialized in tech, investing in seed, Series A, late stage, and growth. With offices and teams in Berlin, Munich and Paris and a keen understanding of their markets and a robust international network, IRIS is a selective partner to the upcoming scale-ups and tech giants, helping them increase their visibility, business reach, and impact across the world. IRIS investments include, among others, companies such as Adjust, Braincube, Cohort, Escape, Exotec, Forto, Kyriba, Jedox, LeanIX, Lumapps, Lookout, Red Points, Shift, Spinergie, SurePay, Talend, Talon.one, WeeFin, Workpath and Zeta Global. For more information, visit www.iris.vc
About The French-German Chamber of Commerce
The French-German Chamber of Commerce, part of the international ecosystems ofGerman Chambers abroad (150 Chambers and delegations in 93 countries), has been fostering business between France and Germany for nearly 70 years. Thanks to its network and its nearly 1000 members ranging from major industrial corporates to SMEs and startups, it is today a key platform of the French-German business landscape. Its staff, based in Paris and Berlin, provides customized advice and services to German and French companies, supporting the successful establishment and expansion of their international business activities. Visit: www.francoallemand.com
For years, France and Germany have displayed friendship and alignment while nurturing a healthy economic competition. Dothey still have so much in common when it comes to their startups ecosystems?
IRIS, leading European tech Venture and Growth investor, conducted a comparative study over 2023. It brings to light the nuanced investment trends and dynamics in France and Germany, revealing a complex tapestry of economic shifts, industry trends, and strategic realignments. In an era where the European market often benchmarks itself with the US, a deep dive into the raw figures and expert analysis of French and German investment reveal insightful trajectories and potential forecasts for the tech industry in 2024, especially around Artificial Intelligence.
A Shift in Investment Patterns: France's AI Bubble vs. Germany's Market Consolidation
Since 2022, both nations have experienced a discernible downtrend in investment activities, with France witnessing a 49% decrease in total investment amounts and Germany a 45% reduction. This contraction is further reflected in the number of funding rounds,decreasing by 12% in France and 22% in Germany, displaying a notably cautious investment climate.
Conversely, German investments came back across various sectors, bouncing back from a major drop in 2022. This new financing environment aligns with a broader interest in diverse industries and technologies such as Health, Foodtech, Sustainability and AI, signaling a robust and balanced market revitalization. Despite the overall contraction in investment activities, 2023 was still a very active year in France: both total investment volume and number of funding rounds are bigger than in Germany, signaling a crucial realignment of investment preferences but not the end of an era (yet).
France experienced a nuanced downturn in investment activities during the year, with the major exception of the very competitive AI field, underscoring the strategic importance and growing confidence in AI technologies within the French investment market. But as French people say, “it’s the tree hiding the forest”: if you withdraw investments in AI from the total investment volume, the total drops massively.
A retrospective glance offers further insight: Germany reached its tech investment apogee in 2021 with a formidable $19.7 billion injected in startups and scaleups, while France's peak followed in 2022, amassing $13.3 billion.
These milestones signify the oscillating cycles of investment growth and consolidation depending on the country:
- the emergence of AI technologies as a focal point of investment activity commands attention: in Germany, AI-based startups raised four out of the top ten funding rounds (6 out of 10 in France), underscoring the strategic importance of this tech in future investment paradigms
- the distinct market dynamics in France: despite a global deceleration, AI investments are still top of minds and charts, suggesting a deliberate investment pivot towards emerging technologies
- Germany's investment climate, after the meteoric rise and fall of B2C unicorns, appears to be recalibrating towards 2021’s healthy spread, with hardware and SaaS back in trends.
"We need a dynamic and rich ecosystem consisting of startups, established companies and well interconnected scientific and research environment on both sides of the Rhine in order to expand the resilience of our countries' economies and secure Europe's technological sovereignty. Consistent and sustainable funding of these young and often financially vulnerable companies from the public and private sector is an essential component for long-term success. With the French-German Tech Lab, the French-German Chamber of Industry and Commerce is proactively fostering French-German cooperation in the field of technology and innovation," said Patrick Brandmaier, Managing Director of the French-German Chamber of Industry and Commerce
The study also reveals a decrease in the number of funding rounds in Germany but many key local investors participated in leading funding rounds: indeed, most major rounds are dominated by corporate investors such as SAP, Porsche SE and local Growth firms, whereas in France, Bpifrance and US VC and PE funds, particularly those with an AI focus, lead many investment rounds.
As for the industries covered, German fundings tend to go to Green Energy, Sustainability, AI, SaaS and Fintech, with a diversified yet focused approach. In France, the split between AI investments and other topics such as Sustainability or industry is unmissable: 6 out of 10 top investments in 2023 went to AI companies, including 2 just to Mistral AI.
Looking at IPOs in France and Germany in 2023, not a single one was a tech company. In contrast, acquisitions and buyout amounts are considerably higher in Germany than in France, with a marked appetite for technology projects like the acquisition of LeanIX by SAP.
The final finding of the study is about unicorns, where they come from, how long it takes them to reach the stageand to keep it up. Many startups that became unicorns in less than 5 years now seem to feel a sudden rock in their boat, questioning the importance of raising and growing at a measured path while still keeping an eye on competition and their means to stay on top of the trend.
Key facts:
- Investment volumes drop: France saw a 45% decrease between 2022 and 2023, while Germany experienced a 40%reduction.
- Falling number of investment rounds: there was a 17% decrease in France and a 25% decrease in Germany.
- Hints of an AI bubble in France: despite a recent peak in investments in 2022, there was still no massive drop, indicating sustained interest in AI.
- Most popular industries in Germany: Sustainability, SaaS and AI stand out as the most popular industries for investment.
- Most popular industries in France: AI, sustainability/energy, and to a lesser extent, Fintech, dominate the investment landscape.
- German corporates are active actors of the tech ecosystem as funds of funds, direct investors and potential acquirers, contrasting with French corporates, which are almost unseeable in the market versus US VC/PE and tech acquirers.
- In 2022 and 2023, German unicorns took approximately 6.7 years to reach unicorn status, showcasing a mix of B2C (60%) and B2B orientations, with a significant tilt towards B2B enterprises. In total, Germany registered 50 unicorns.
- Similarly, in France, it took an average of 7.4 years for startups to become unicorns, with a balanced distribution between B2B and B2C, yet with a pronounced emphasis on B2B solutions (63%), underscoring the strategic drive towards enterprise-oriented innovations within the French tech landscape. In total, France registered 29 unicorns.
About IRIS
IRIS is a European Venture and Growth firm specialized in tech, investing in seed, Series A, late stage, and growth. With offices and teams in Berlin, Munich and Paris and a keen understanding of their markets and a robust international network, IRIS is a selective partner to the upcoming scale-ups and tech giants, helping them increase their visibility, business reach, and impact across the world. IRIS investments include, among others, companies such as Adjust, Braincube, Cohort, Escape, Exotec, Forto, Kyriba, Jedox, LeanIX, Lumapps, Lookout, Red Points, Shift, Spinergie, SurePay, Talend, Talon.one, WeeFin, Workpath and Zeta Global. For more information, visit www.iris.vc
About The French-German Chamber of Commerce
The French-German Chamber of Commerce, part of the international ecosystems ofGerman Chambers abroad (150 Chambers and delegations in 93 countries), has been fostering business between France and Germany for nearly 70 years. Thanks to its network and its nearly 1000 members ranging from major industrial corporates to SMEs and startups, it is today a key platform of the French-German business landscape. Its staff, based in Paris and Berlin, provides customized advice and services to German and French companies, supporting the successful establishment and expansion of their international business activities. Visit: www.francoallemand.com
