Innovation advocacy group pushes for a unified, steadfast approach to legislative support for technological advancements

In the heart of Europe, Germany's startup scene is buzzing with activity. Over the first half of 2025, an impressive 1,500 new startups sprung up, marking a 9% increase compared to the previous year 1. However, the road ahead is fraught with challenges, with the Tariff Compliance Act effectively barring young companies from public tenders due to requirements they cannot meet 2.

The Startup Association, a key player in the German startup ecosystem, has voiced its concerns about the federal government's approach to innovation policy. Criticizing a lack of responsibilities and coordination between ministries, the Association calls for a consistent innovation policy to help Germany become the innovation and growth engine of Europe once more 3.

The current governing coalition, a union between the CDU/CSU (Union) and the SPD, is spearheading innovation policy in Germany. Chancellor Friedrich Merz (CDU) has been at the helm since May 2025, following the 2025 federal election where a Union-SPD coalition gained a majority and formed the government 4. Discussions are ongoing to improve coordination between ministries and enhance startup-friendly conditions, although specific reform proposals remain unclear 5.

Verena Pausder, CEO of the Startup Association, emphasizes the need for a new startup strategy to bring new momentum and make startups a top priority 6. One of the Association's key concerns is the Risk Limitation Act, with the planned change in valuation rules posing a significant threat to smaller funds and potentially endangering their existence 7.

As Germany competes on the global stage, a European capital market union, the opening of institutional sources in Germany, more attractive exit channels, and swift reforms are essential for the startup scene to thrive 8. The Association also calls for reliability and speed in the innovation policy from the federal government 9.

In the first half of 2025, 4 billion euros in venture capital flowed into Germany 10. However, around a third of this venture capital comes from the USA 11.

Software and industrial solutions, driven by AI, are leading the new startup sector in Germany 12. Yet, the German startup scene faces challenges, with Europe offering weak exit markets for startups and insolvencies increasing, particularly in the B2C segment among startups and scale-ups 13.

The original promise of the WIN initiative to mobilize 12 billion euros for startups by 2030 must be implemented with transparency and speed 14. The current economic crisis, as indicated by the third consecutive year of recession, has not deterred the founding of new startups 15.

Despite the challenges, Germany remains a beacon of innovation. In the first half of 2025, 1.7 billion euros of the venture capital invested in Germany went to AI startups 16. However, reforms aimed at reducing bureaucracy and digitalization in Germany are progressing slowly 17. With the number of unemployed in Germany rising above three million for the first time in a decade during the current economic recession 18, the need for a startup-friendly and innovative Germany is more pressing than ever.