Perspectives

In the last days before Germany’s general election, the public debate has focused on migration and the economic downturn. We want to shed some light on innovation and tech startup funding. Naturally, we think this is one of the most important areas the new government should be focusing on.

How we got here:

Following the collapse of the three-party coalition between the social democrat SPD, the Greens, and the liberal FDP, Germany is heading for early general elections this Sunday, 23 February.
According to the current polls, the conservative CDU (30%) will likely lead a two-party coalition under Chancellor Friedrich Merz, leader of the CDU. The two most likely coalition options are CDU/SPD and CDU/Greens, although the CDUs powerful Bavarian sister party CSU takes a strong anti-green party stance. Depending on the voting outcome, parliamentary arithmetics might require three parties to form a majority. The FDP is polling mostly below Germany’s 5% electoral threshold.

The far-right AfD is polling at about 20% and with that will most likely be the second largest party by votes. However, all democratic parties, or parties of the ‘middle’, have categorically ruled out forming a coalition with the AfD, which is why we have excluded it in our analysis.

What we analyzed:

We used our in-house analytical tools to look at major parties’ conversation in the media around innovation and startups, as well as associated sentiment, over a 30-day period. A few takeaways:

1. The topic around innovation and tech startup funding is receiving very little public and media attention. The election campaigns and manifestos are doing little to change that.
2. As one might expect, the broadly perceived as more business-friendly parties FDP and CDU are the most vocal and talked-about parties on the issue, with similar amounts of mentions. Despite of their low performance in the polls and campaigning, on the issue of innovation, the FDP punches above its weight.
3. The SPD showed the most positive sentiment towards innovation and startups, but interestingly has the least share of voice on the topic overall. The positive sentiment is mainly driven by state-level campaigning and policy decisions from SPD-led state ministries that contribute the party’s share of voice.
4. The Greens see a very polarized conversation around startups. They are both positively and negatively connected to the issue. On the one hand, current Federal Minister for Economic Affairs and the Greens’ chancellor candidate Robert Habeck is being criticized as partly responsible for the bad performance of the German industry. On the other hand, his party is closely associated with innovation through their strong stance on the green transition.

Overall, our analysis shows all parties are committed to creating a more favorable environment for  startups in Germany. At the same time, their statements are limited and their positions, particularly on funding, lack clarity.

What’s next for your startup:

While concerns over economic stagnation remain, Germany has one of the most robust tech sectors in Europe. Its IT industry alone generated revenues of over EUR 150 billion in 2024 (for comparison: the US IT industry generated about EUR 400 billion in the same year).

It is likely that the change from a social democrat to a conservative-led government will result in a slight upturn. This is not owed to the old adage that ‘conservative parties are better at running economics’, but rather that the next government is likely to agree on looser fiscal policies and changes to the constitutional debt brake. This will be good news for investors and founders alike.

As Germany aims to build on its historic leadership in manufacturing and the automotive industry, the country is pushing to assert itself as a leader in Industry 4.0. Already outstanding growth areas in Germany that are likely to see increased investment focus after the elections include:

• Greentech including renewable energy & circular economy
• Automotive/EVs
• Deep tech including robotics, aerospace, and defence
• Semiconductors
• Quantum computing
• Govtech

Apart from approaching the well-established VCs, we see increasing numbers of founders we speak to turn to German family offices and private equity in the above fields. Moreover, government-funded initiatives like the High-Tech Gründerfonds, currently managing about EUR 1.4 billion in capital, and the government WIN Initiative, which is set to mobilize EUR 12 billion for startups by 2030, will remain central to founders in Germany.

Need a roadmap for navigating – and shaping – the evolving political landscape? Our team specializes in helping startups transform policy and communications challenges into strategic advantages – drop us a line at contactus@trilligent.com