Unicorns are start-up companies that are privately held and have a market capitalization of over one billion USD. Germany’s start-up scene is well-represented in this exclusive club. What’s fascinating about the analysis is that these heavyweights span across all industries.
Finance Sector Most Popular
Consumers are likely most familiar with companies from the financial sector. By the end of 2024, N26 had around eight million customers (source: Wikipedia), while the online broker Scalable managed 600,000 accounts (source: extraetf). Unfortunately, no customer data is available for Taxfix, only its €58.1 million loss in 2022 (source: financefwd). Solaris, an “embedded finance platform,” operates behind the scenes, handling banking operations for B2C fintechs as well as companies like ADAC and Samsung.
Flixmobility, now Flix SE, is also widely known. FlixBuses operate across Europe, presenting themselves as a more punctual alternative to trains. Enpal is familiar to property owners interested in installing photovoltaic systems. Forto and Volocopter are less well-known and focus on transport: Forto offers innovative shipping solutions, while Volocopter specializes in urban air taxis.
1Komma5 has gained recognition among consumers seeking “clean” and affordable energy solutions. Its AI purchases electricity for customers when prices are lowest on energy exchanges.
Beyond these examples, the true heavyweights can be found in enterprise technology—a predictable trend. Contentful, for instance, offers a cloud-based content management system and serves clients like IKEA and Red Bull.
Celonis was founded back in 2011. Its business idea was to digitize management processes and use process mining to identify potential optimizations. Celonis is by far the most valuable German start-up—a status owed not only to its innovative idea but also to its longer time in operation.
Where Does the Money Come From?
The initial steps often involve loans from KfW or bank loans secured by KfW guarantees. As investment needs grow, venture capital firms typically provide the necessary funding. A unique option here is “business angels.” These investors not only finance start-ups but also offer their networks as valuable resources and provide advisory and organizational support.
Traditional bank financing plays a minor role in the start-up world. This approach conflicts with banks’ principle of “lending umbrellas only when the sun shines but taking them back at the first sign of clouds” (Mark Twain).
The type of financing largely depends on the business model at the outset. In most cases, founders—if there are multiple—start with a limited liability company (GmbH). The story of Steve Jobs and Steve Wozniak starting a billion-dollar empire in a garage would be much harder to replicate today. Over time, a GmbH can transition into a public limited company (AG). Partnerships like KGs, KGaAs, or OHGs are rare in the start-up world; instead, sole proprietorships are more common at the very beginning.
The Goals of Unicorns
The goal for all founders is identical: entrepreneurial success. However, there are different ways to achieve this once results are proven. The most common goal among founders is an IPO. This doesn’t necessarily mean giving up the unicorn criterion of “private ownership.” Shares don’t have to be immediately tradable; they can remain with the original owners. However, if traditional venture capital firms are heavily involved, their goal is often to make significant profits through public share sales after an IPO—potentially returning the unicorn to the realm of fantasy.
What Does the Future Hold for German Start-Ups?
Predicting the future success of German start-ups is difficult. Winning on shows like Die Höhle der Löwen may generate headlines but isn’t enough for long-term success. Beyond ideas themselves, creating a founder-friendly environment in Germany is crucial. The term “reducing bureaucracy” cannot be overlooked here; this bureaucratic burden deters some from pursuing entrepreneurship altogether. While governments aren’t responsible for generating ideas or implementing them, they do play a role in shaping the environment. The current representatives among unicorns demonstrate that success is possible despite challenges.
