German tech startups are benefiting from a boom in artificial intelligence and defense, expecting to receive 7.4 billion dollars in investments this year. This marks a ten percent increase compared to 2024, according to a report by venture capital firm Atomico. Germany ranks second in Europe behind the UK.
The London-based venture capital firm Atomico estimates in its eleventh report on the state of Europe's startup scene that tech companies in Germany will receive around 7.4 billion dollars (about 6.4 billion euros) from investors this year. This represents growth of more than ten percent compared to 2024. Across Europe, venture capital investments are expected to rise by seven percent to 44 billion dollars.
"Technology is no longer just an economic sector today," said Tom Wehmeier, partner at Atomico. "As a driving force, it shapes our administration, defense, energy supply, banking, or healthcare today."
One third of Europe's funds, or 36 percent, go to deep tech and artificial intelligence. The defense sector is growing particularly strongly: Investments in technological solutions for the defense industry increased by 55 percent to 1.6 billion dollars. The Munich-based startup Helsing, specializing in AI for defense firms, led with around 660 million dollars raised in June.
Germany is also gaining ground among investors: While London hosted eight of Europe's ten largest venture capital funds in 2024, three German funds advanced into the top ten this year.
For 2025, Atomico forecasts around 14 billion euros in AI investments in Europe, with frontrunners like DeepL from Cologne, Aleph Alpha from Heidelberg, and Lovable from Stockholm. However, the US is far ahead: 146 billion dollars will flow into AI there this year—more than ten times as much. Europe matches the US in startups founded but lacks capital. Larger tech firms increasingly consider moving to the US with its big investors. Venture capital investments from pension funds in Europe are three times lower than in the US, especially in the German-speaking region.
Atomico calls for Europe to view entrepreneurship more positively. Only 20 percent of large companies collaborate with startups, compared to 50 percent in the US. Nine percent of public contracts in Europe go to innovations, versus 20 percent in the US. National regulations fragment Europe: A unified framework is needed to allow founders to "establish digitally within 48 hours, raise capital, and operate seamlessly across borders."