GERMANY Trends and Developments Contributed by: Felix Blobel and Sascha Leske, Noerr
ation of around USD300 billion, AI investments will likely continue to occupy centre stage in the VC universe as the year progresses. Climate tech and green energy The EU Green Deal and Germany’s energy tran - sition targets have been fuelling VC interest in cleantech and climate change mitigation tech - nologies for some time. Key areas of investment include energy storage, battery technologies, charging solutions for EVs, grid optimisation, hydrogen electrolysis, carbon accounting plat - forms, and circular economy models. In 2023 and 2024 combined, climate tech raised some EUR3 billion in Germany, with notable deals including 1KOMMA5° (solar platform), Enpal (solar panel and heat pump installation), Heli - atek (solar panel solutions) and Sunfire (green hydrogen). Investors are looking for capital- efficient, scalable technologies that can survive regulatory shifts and commoditisation pressure. Hardware-heavy start-ups are increasingly pair - ing VC with public grants, particularly from the European Innovation Council and German KfW programmes. The emergence of defence tech Previously an overlooked sector in European VC that also seemed at odds with many inves - tors’ ESG targets or investment restrictions, defence tech is experiencing a significant shift in perception and venture firms are now cau - tiously navigating this space, balancing ethical diligence with a growing interest in autonomy, cyber defence and surveillance systems. Rus - sia’s full-scale invasion of Ukraine, NATO readi - ness and interoperability goals, and EU strategic autonomy debates have all catalysed attention toward dual-use technologies. Start-ups such as Helsing AI (EUR209 million round co-led by Gen - eral Catalyst and Spotify’s Daniel Ek) and ARX Robotics are developing AI-enabled defence
platforms, surveillance tools, and unmanned systems. While ethical debates remain, the Ger - man Bundeswehr and various defence accel - erators have opened new channels for start-up procurement and public-private partnership. This space is expected to grow, fuelled further by the recent constitutional amendment in Ger - many partially lifting debt limitations for defence- related spending, albeit with scrutiny over export Fintech investment has somewhat cooled, par - ticularly for consumer-facing neobanks and “Buy Now, Pay Later” models. Instead, investors, as well as incumbent financial institutions through their Corporate VC activities, are focusing on backing B2B infrastructure providers, regtech, and embedded finance start-ups. Biotech remains strong, supported by Germany’s life sciences clusters in Heidelberg, Berlin, Dres - den and Munich. Noteworthy trends include personalised diagnostics, RNA platforms, and cell therapy, often integrating AI-based tools into the business model. Deep-tech hardware – including quantum computing, photonics, and chip design – has seen selective support, often blended with public subsidies or corporate VC. Notable players include IQM Quantum, Semron, and Marvel Fusion. Convertible instruments and the rise of SAFEs Convertible instruments, mainly convertible loans and increasingly also US-style Simple Agreements for Future Equity (SAFEs), remain very popular in Germany’s early-stage start-up scene. These largely standardised instruments allow start-ups to raise capital without setting a valuation by deferring the pricing event to a future equity round, making them attractive in times of market uncertainty. The use of SAFEs in control and ethical AI concerns. Fintech, biotech, and deep tech
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