Biotech companies in Germany seek financial support through tube-based investment ventures.
** study reveals: German Biotech Industry Lags in Venture Capital Financing**
Despite Germany's strong research prowess in biotechnology, the country trails behind other European nations in securing venture capital (VC) funding for biotech startups. According to a joint study by consulting firm EY and industry association Bio Deutschland e.V., German biotech companies received only 0.02% of the country's GDP in VC investments last year, a figure significantly lower than other nations.
The report highlights several key factors contributing to the industry's funding challenge. The German biotech landscape faces a fragmented and complex regulatory environment. Although the EU Biotech Act and initiatives like the EMA’s PRIME scheme are designed to streamline innovation and expedite approvals, local startups still grapple with national regulations related to registration, tax compliance, and bankruptcy laws.
Another hurdle is the relatively conservative investment culture in Germany. While active biotech funding vehicles such as the High-Tech Gründerfonds (HTGF) contribute significantly—managing over €1.4 billion, supporting more than 700 startups—the overall VC environment tends to favor later-stage or safer investments, potentially limiting funding for high-risk, early-stage biotech ventures.
The volume and aggressiveness of venture capital investment in Germany, particularly early-stage rounds, are also lower than in more established biotech hubs like the UK or Switzerland. This is partly because there are fewer specialized biotech VC funds and a smaller network of biotech angels and institutional investors focusing on high-risk biotech startups.
Showing commercial viability and clinical data is becoming increasingly important for attracting investors in 2025. German biotech startups may face difficulties in these areas due to longer development cycles and funding gaps in the early stages, reducing their attractiveness for VC financing compared to peers in more venture-friendly countries.
Additionally, while public-private partnerships like HTGF play an essential role, Germany's biotech ecosystem does not yet enjoy the extensive network of private sector-led funding initiatives and international partnerships found in other European countries.
The study underscores that Germany's biotech industry lags behind the UK and Switzerland due primarily to a complex regulatory environment, a more conservative investment culture, and challenges in early-stage funding attractiveness. Streamlining regulations and boosting early-stage investor engagement could help improve Germany's position in biotech VC financing.
The study suggests that a complex regulatory environment and a more conservative investment culture contribute to Germany's biotech industry lagging behind the UK and Switzerland in venture capital financing. Streamlining regulations and increasing investor engagement in early-stage funding could help improve Germany's position in biotech VC financing, particularly when considering the significant role technology plays in biotech startups.
