Munich is challenging Berlin‘s long-held status as Germany’s startup capital, fueled by a surge in venture capital and a thriving ecosystem of established industry and academic institutions. A record 3,568 new companies launched across germany in 2025, with Bavaria – and particularly Munich – accounting for a significant share of that growth. This report examines the key factors driving Munich’s ascent, from the success of “decacorn” Celonis to the pivotal role of UnternehmerTUM, Europe’s top-ranked startup hub.
Munich has rapidly emerged as a leading European hub for startups and technology investment, attracting major players like Deutsche Telekom and Nvidia, and even surpassing Berlin in its appeal. The Bavarian capital recently saw the swift construction of an artificial intelligence factory jointly established by Deutsche Telekom and chipmaker Nvidia – a location already chosen by OpenAI for its German hub last year.
The shift underscores a broader trend: 2025 marked a record year for startup formations in Germany, with 3,568 new companies launched nationwide, a 29 percent increase from 2024 and exceeding the previous high in 2021. Notably, Bavaria accounted for approximately 22 percent of these new ventures, with 785 startups founded in the region.
This surge in new companies is coupled with significant investment. Bavarian startups secured nearly 2.1 billion euros in venture capital during the second half of 2025, approaching the total of 2.3 billion euros invested across all of Bavaria in 2024. According to a recent report by EY, almost half – around 46 percent – of all venture capital invested in German startups during the year flowed into Bavarian companies, significantly outpacing Berlin, which attracted 1.5 billion euros.
Many of Germany’s most successful startups, including Celonis, a global leader in process mining, Isar Aerospace, a rocket launch company, and Helsing, a defense-tech firm, are rooted in Munich. These companies largely operate in the deep-tech and industrial sectors, a concentration that benefits from Munich’s robust industrial ecosystem.
Munich is home to a significant number of Germany’s largest companies, including Allianz, Infineon, Siemens, and BMW, as well as a strong base of medium-sized enterprises. This established corporate presence provides a crucial foundation for innovation and collaboration.
The city’s academic institutions also play a vital role. The Technical University of Munich and Ludwig Maximilian University are internationally renowned, and research facilities like the Fraunhofer Institute contribute to a high density of research and innovation. This academic strength feeds a pipeline of talent and ideas into the startup ecosystem.
A key driver of Munich’s success is UnternehmerTUM, a startup center recently recognized by the Financial Times as the leading startup hub in Europe. Founded with substantial financial backing from BMW heiress Susanne Klatten, UnternehmerTUM supports founders throughout the entire lifecycle of their businesses, from initial concept to international scaling. The center has already fostered a number of “unicorns” – companies valued at over $1 billion.
“The combination of founders, good education and support from universities, and the presence of anchor customers is a crucial success factor for the Munich startup location,” said Bastian Nominacher, co-founder and co-CEO of Celonis, in a recent interview.
Celonis itself exemplifies Munich’s entrepreneurial spirit. Founded in 2011 by Nominacher, Alexander Rinke, and Martin Klenk as a student project, the company has grown into a global leader in process mining, utilizing artificial intelligence to analyze and improve business processes. The initial idea stemmed from a project at Bayerischer Rundfunk, where IT ticket processing times were excessively long, sometimes taking up to five days.
The founders developed a software solution that identified bottlenecks in the process, reducing ticket resolution times to just hours. Initially bootstrapped, Celonis secured early traction by sending 1,500 handwritten letters to potential clients, a strategy designed to stand out from the digital noise. Siemens became an important early customer, bolstering the company’s credibility.
Today, Celonis serves three-quarters of the companies listed on the DAX index, and is valued at more than $13 billion, making it Germany’s first “decacorn” – a privately held company valued at over $10 billion. The company employs over 3,000 people globally, with a significant presence in Germany and the United States.
Nominacher believes there is still significant potential for growth, particularly in combining new technologies like AI and process mining with existing German expertise in areas like mechanical engineering. “Companies here have an incredible amount of data, which can be used much more effectively with AI,” he said.
The founders of Celonis are now actively investing in other startups, and the company maintains close ties with the Technical University of Munich and UnternehmerTUM, demonstrating a commitment to giving back to the ecosystem. The number of startups founded by students and alumni has increased dramatically in recent years.
UnternehmerTUM is currently inundated with startup ideas, having grown from just two employees in 2002 to over 400 today. The center supports the creation of more than 100 scalable startups annually. “Munich has invested heavily in technology for years, through a high-tech agenda, and that bet is now paying off,” said Christian Mohr, Managing Director of UnternehmerTUM.
The center’s success is built on a long-term approach, focusing on translating research into marketable businesses, particularly in the B2B and deep-tech sectors. “Investors go where there is a regional concentration of strong teams and technologies,” Mohr explained.
Approximately 1,000 new startup ideas are generated each year, with around 1,500 teams receiving intensive support, and roughly 150 ultimately deemed scalable. The selection process is rigorous, evaluating founders’ competence, team composition, the novelty and relevance of the technology, societal impact, and market and funding potential.
Beyond industry and research, Munich’s quality of life is a significant draw, making it easier to attract skilled workers. The city has consistently ranked among the most livable in Europe, and boasts a well-developed infrastructure, including a major international airport. A recent PwC analysis found that 67 percent of entrepreneurs in Munich are satisfied with the ecosystem, compared to just 39 percent in other parts of Bavaria.
Networking among founders is particularly strong in Munich, with 78 percent of respondents reporting having an average of 10.8 friends also active in the startup scene, compared to a national average of 7.3. Close ties to universities and effective research transfer are also highly valued.
The success of UnternehmerTUM has caught the attention of the German federal government, which is now exploring ways to replicate the model in other regions, with financial support from the Ministry of Economic Affairs. Heilbronn, Hamburg, Essen, and Dresden have been identified as potential locations, each with its own strengths and regional support.
