Music.
Hello and welcome. I would like to say it's a sunny welcome,
but unfortunately it's rather gray here in New York.
We welcome you to our regular startup news from the startup and tech entrepreneurship
scenes in Germany, Austria, and Switzerland.
We are back from our summer break. I only cling on to this like floral motive
short sleeve I'm wearing.
And we bring you a massive news episode today. In fact, it's so long we had
to cut it into two episodes.
So like double the fun our startup news
is recorded with me in new york city
joe is joining from frankfurt hey from
nightly frankfurt hey guys how you doing and now
i started to mention myself first which if you want to get into german idioms
in german you usually learn the donkey always mentions himself first i learned
that when i grew up the esel nennt sich immer zuerst today's news cut is This is August 19th.
As always, all news not included will be in our next shows.
Next news wrap up to be published October 2nd, wrapping up September and the remaining August then.
We need to cut our news seriously today so you can have a brief news overview.
We will have other news pieces in our blog posts on startup.io slash blog.
Those are the ones that we simply cannot cover here. Otherwise,
the news would stretch far too long.
To give you a bit of background, this time we went through more than 350 news pieces for you.
Therefore, we decided for the first time in the history of StartupRate.io that
we will split this news recording into two pieces to keep them short and crisp.
Happy Labor Day to you if you are celebrating.
And entrepreneurs, since they
are working so much, I guess, have a special relationship to Labor Day.
But before I talk myself even more into a corner, I'm going to hand it over
to you, Joe, to kick us off with the highlights.
Yes. Thanks, Chris. I always appreciate your energy here.
The highlights. By the way, I love Labor Day because it usually frequently coincides with my birthday.
Our highlights, startup funding momentum across Europe and the DACH region,
accelerated in August with AI, climate tech and fintech taking center stage.
Berlin's AI ecosystem made global headlines as one stealth unicorn skyrocketed
from $350 million to a $2.3 billion valuation in just four months,
underlining the region's dominance in enterprise automation and SaaS-driven AI.
Meanwhile, the macro backdrop remains tense, with Germany's GDP contracting
sparking recession fears.
But venture capital continues to pour into deep tech and energy innovation as
hedge bets against cyclical slowdown.
Major deals shaped this month's narrative.
Climeworks raised $162 million to advance its CO2 capture technology,
while the Stuttgart-based Makersite secured €60 million Series B to scale its
sustainable supply chain software Q&A.
Added 62 million Series A, the 60 million Euros Series A to push quantum inspired
climate solutions and Munich's TANSO closed 12 million Euros Series A underscoring
climate tech as a long-term growth pillar.
On the fintech front, N26 faced regulatory heat and leadership shakeups,
even as Scanbot SDK exited via acquisition and bling absorbed FinStep,
highlighting both consolidation and compliance challenges in Europe's neobanking sector.
For founders and VCs, these developments signal a bifurcated market.
Late-stage climate and AI startups are attracting mega rounds and unicorn valuations,
while fintech and mobility players like Lilium navigate restructuring and defense
pivots to secure survival.
This month, wave of scale-ups and exit reinforces the thesis that Europe's competitive
edge lies in climate innovation,
quantum technologies, and enterprise AI sectors now too big for global investors to ignore.
Let's Talk Startups. There's a link. You can give us feedback.
As we said, the first piece of this news will go live September 1st, 2025.
And I'm just turning around and
checking. And number two, part two will go live on September 4th, 2025.
Chris, you look pretty sharp in your shirt.
And by the way, without discussing it upfront, we both are wearing shirts.
Chris, you want to take over the top news, especially if you're just so nice. For once, we clean up.
I'm going to kick things off with Berlin's N8N.
It's a workflow automation startup that has rocketed to a $2.3 billion pre-money
valuation in August, like a week ago, after Excel led a mega round with Meritech
Capital expected to join,
marking one of Europe's biggest AI-driven automation deals this year.
The company's value has jumped from just 350 million dollars in March 24.
So within one and a half years.
We have seen a more than six times increase there on the back of surging demand
for AI agents and enterprise grade workflow automation.
They say they have an annual recurring revenue of more than $40 million and
a 200,000 member community.
And N8N has become a leading open source alternative to Zapier and Make.com.
Lilium brings in Pluta as insolvency advisor amid their defense pivot.
So Lilium, we talked about them quite often in our podcast already,
based in Munich as an air taxi startup that faces mounting insolvency pressures,
as Süddeutsche Zeitung has reported, for example.
Several times last week.
And restructuring advisor AAMG Pluta has been now called in to guide the company through its crisis.
That follows Handelsblad's revelations that Lilium is weighing a defense sector
pivot to generate near-term revenues with the defense sector right now being
quite booming in European countries because they're investing more due to the
Ukraine war and the US being a less reliable partner than in the past.
Business Insider's note on fresh investor interest is reviving a 20 million euro financing deal.
Despite pioneering Europe's EVT oil ambitions, Lilium has endured cash burn,
layoffs and delayed certification milestones.
So it's still relatively uncertain what their commercial future will bring.
And now thinking about dual-use applications in defense and emergency services,
Lilium is pivoting, kind of hedging the risk.
And they are joining a wider European trend of aerospace startups,
turning to government-based contracts to bridge long funding cycles.
N26, another company we've been talking about a lot here,
a Neobank based in Berlin, is facing a severe governance crisis since probably
the most severe one since its founding as their co-founder and CEO Valentin
Steilf stepped down a couple of days ago, August 15th, earlier than planned,
reported, for example, by Golem and FAZ, the exit follows BaFin's special audit,
BaFin being the regulatory committee institution and financial supervisor.
So they audited N26 and revealed serious deficiencies, gravierende menge in
fraud prevention and compliance, raising investor impatience and regulatory pressure.
The move also coincides with leadership reshuffles, including a new risk officer,
chief risk officer from Santander, replacing N26 outgoing CRO.
And together, these developments mark a deep structural shakeup at a company
where we've had a lot of shakeups.
I mean, we have been talking about them quite often now and watching them from
being a company where a lot of people were expecting great things from.
To something that right now feels as if every month we come up with a new talk
about, okay, this is their next issue.
And the sad thing is that, for example, companies like Revolut show that the new bank model can work.
So it's really sad that this, at least right now, is not working out as it could be.
Moving on to Switzerland, where we see the cleantech scale-up OrangeBet having
secured a landmark 825 million euros allocation from the European Hydrogen Bank, according to MoneyCab.
The funding will be used to expand industrial-scale hydrogen production and
infrastructure projects across Europe.
So OrangeBet is going to become one of the largest single hydrogen allocations
tied to a DACH-based company.
OrangeBet's Wynn underscores Brussels' determination to accelerate green hydrogen
commercialization as part of the EU's decarbonization strategy.
And it also positions the Swiss player alongside other continental leaders,
such as Sunfire from Germany or H2 Mobility.
OrangeBat is targeting both industrial energy users and cross-border hydrogen
corridors and aims to become a central enabler of Europe's clean tech transitions.
And that's it with the really big top news section.
And that leaves us with our first little ad break.
Taking over after the ad break from Chris, we don't put anything here in housekeeping
and time to brag this month, but there'll be more coming up.
Talking about the ecosystem here.
In Europe, the European Innovation Council selects 40 startups for new funding
round reported by Silicon Canals. They selected 40 startups from across Europe
for equity and grant support.
The companies span biotech, AI, and sustainability, reflecting EU-level support for scaling deep tech.
Several DACH startups are included, though not all names were disclosed in this article.
Two companies, Quant, Q-W-A-N-T, and Ecosia launched STAN, Europe's independent search index.
TechCrunch reported that French search engine Quant and German Echo Search provider
Ecosia jointly launched STAN,
a European search index designed as a privacy-first alternative to Google.
They aim to enhance Europe's digital sovereignty and lay the groundwork for
AI-native retrieval systems. The launch could reshape the European surge and add tech market.
The talk going to Germany here.
The IFO Business Climate Index edges higher in July 2025.
On July 25th, 2025, the IFO Institute in Munich reported a modest increase in
its closely watched Business Climate Index, reflecting cautious optimism in the German economy.
Sentiment improved in industry and services, but remained weak in construction and retail.
In other news, Dresden tops some up 2025 cost ranking for founders.
Founders, Leipzig and Bremen follow.
Sum ups analyzers of 71 German cities ranked Dresden number one for cost efficient
funding, setting low retail rents, utilities and competitive effective corporate tax.
Leipzig placed second, Bremen third, while Munich ranked last among the top
20 due to high rents and utilities.
But apparently you could still work as a high rent startup hub.
The study weights median wages, unemployment, rents, utilities,
and effective corporate tax, signaling cost advantages in East German hubs for early stage teams.
KFW, Gründungsmonitor 2025, meaning the founding monitor 2025,
reports stable startup activity despite economic headwinds.
Munich startup summarized the KfW Krönungsmonitor 2025, showing that the number
of new businesses in Germany remains robust.
Early stage activity is supported by resilience in tech and digital sectors,
even as macroeconomic uncertainty waits on financing, policymakers are watching
indicators closely to refine support schemes.
German GDP dips again. Technical recession looms in Q2 2025.
Tagesschau, it's like the main news source in Germany, right?
Everybody watches Tagesschau APM here in Germany. It's the law. You have to watch that.
They reported that Germany's economy shrank by 0.2% in Q2 after flat Q1,
meeting the definition of technical recession.
Exports and industrial output weakened while private consumption stagnated despite easing inflation.
The downturn adds pressure to fiscal debates and heightens importance of startup
innovation-driven growth narratives in the Dach region.
Berlin to set new financial rails for defense startups to speed procurement and scale.
Handelsblatt report that the federal government will establish funding procurement,
Weichen, meaning Rails, to help defense tech startups commercialize faster.
Aligns with dual-use momentum and NATO-related demand.
Dual use, didn't we just have something with Lilium like that?
No new budget timelines versus our priority entry. Germany clears the path for
remote-operated driving pilots, opening the door for teleoperation startups.
German authorities signal the go-ahead for remote-controlled driving pilots,
establishing the framework for teleoperation in logistics and mobility.
The policy shift could benefit companies building tele-driving stacks,
remote-op centers, and safety cases aligned with EU rules. The article does
not name specific startups.
And Chris, you know what's very interesting? We actually talked about it.
I talked with a lawyer about it inside Germany's autonomous driving law in 2021
because this was already within the frame of law.
So we have been quite ahead of the curve here. But Chris, you look pretty barbarian.
You want to take over Vavaria here.
It's a unique thing that they are highlighted here. I mean, you're dressed in white and blue, too.
But yeah, I mean, autonomous driving, this is also a story that has been with
us forever. And we've been promised that we are so close to finally actually making it work.
Waymo apparently works pretty well on the U.S. West Coast. But so far,
I mean, I'm sure if you went back in the archives that you would be able to find.
Assumptions, promises that would
have said, okay, in 2025, there will be autonomous driving everywhere.
And not much has happened. But we've already discussed it in 2021,
so there will be one person ahead of a lot of screens.
And if any autonomous driving vehicle gets into trouble, a human driver from a center takes over.
That was basically the idea we discussed in 2021, and now it seems to become
reality, at least in ports.
There also was a huge report in Guardian based on reporting,
I think even for 100th platform Germany,
about how nonchalant Tesla actually deals with really deadly crashes and the
car taking over when the drivers don't really want it.
And then actually a lot of times the The people who are the survivors of the
dead people never get answers for what actually happened in the car and why
the crash happened, why it accelerated.
It was a really disturbing read. Anyway.
Bavaria, we established it already, white and blue, stayed in the German South,
passes a landmark resolution to unlock foundation capital for startups and VC funds.
The Bavarian Parliament approved a pro-startup resolution to invest in startups
and VC funds, a little policy tweak that aims at attracting more endowment capital
into Dachventure markets.
Austria, to the south of Bavaria and to the south of Germany.
There we see what they call a Gründerwelle, a founder's wave,
meaning there's a clear uptick in new company formations in Austria despite
the macro headwinds, a surge indicating resilient founder activity,
improving access vehicles, public co-funding,
corporates and regional initiatives.
We have in the show notes details split for different sectors and seed series totals.
Vienna-based Allocator 1 launches a fund of funds for European VC.
It's a platform designed to channel institutional money into European VC funds.
And the startup model aims to diversify LP risk and simplify access to venture investments.
Switzerland, as we say in geography, to the left of Austria,
west of Austria, has... You just said to the left of Austria,
Chris. Yeah, that's what we say.
Pinterest launches a new AI tech hub in Zurich in order to strengthen their
DACH region footprint and also signaling a major investment in local research and development.
The hub will focus on personalization, generative AI, and content safety.
And this, our dear friends, is already the end of part one of our startup news.
We will be back in three days for those of you who listened to us on day one.
If you download us later, you can also wait three days, but you can also just
go into your app and download the second part if you want to.
So thanks for now. And we'll hear you soon. Talk soon. Bye, guys. Bye,
guys.
Music.