Germany Green Startup Monitor 2021: facts and figures
By: Pedro Gonçalo Ferreira
Tags: German Startups, Impact, Sustainability, Green Tech

According to the results of GSM 2021, the proportion of green startups rose to 30 percent of all startups in Germany. They play a key role as the engine of sustainable transformation.

Green startups make significant contributions to ecological and social sustainability beyond their potential for economic success. In doing so, they continue to be confronted with clear challenges, especially the difficult access to capital. Against this background, GSM 2021 also formulates political recommendations for action.

Double dividends from green startups: economic effects and social added value

Green startups are characterized by a “double dividend”: In addition to economic effects such as the creation of jobs and returns for investors (economic dividends), green startups also generate added value for society. This “social dividend” includes, for example, the contributions made by sustainable start-ups to the reduction of greenhouse gas emissions.

The study was carried out by the Borderstep Institute and the Federal Association of German Startups for the third time in 2021 and is funded by the German Federal Environment Foundation (DBU). The Green Startup Monitor 2021 can be downloaded free of charge.

Key results

German startups are becoming increasingly greener and more impact-oriented.

Green startups are more related to hardware.

Green startups see themselves as more innovative.

The female founders quota of green startups is higher, but stagnating.

Green startups want more venture capital and better early-stage financing.

An exit is only interesting for half of the green founding teams.

The satisfaction of green startups with their regional ecosystem varies.

The difficulties with raising capital are getting worse.

Green startups are in favor of a ‘Sustainability’ funding line and more state VC funding.

Important numbers

The share of green startups in all startups in Germany is 30%.

76% of all startups in Germany see their ecological and social impact as an important corporate strategy.

50% of all startups in Germany have integrated their social / ecological impact into their key performance indicators.

42% of green startups want venture capital (only 16% have already received venture capital).

The three biggest challenges facing green startups are sales (63%), raising capital (49%) and product development (46%).

47% of the green startups demand the creation of a funding line ‘Sustainability’ with target group-specific financing offers for green and sustainable startups.

Climate change has also become more and more noticeable in this country in recent years. The economic renewal after the Corona crisis must therefore be a restructuring of production and consumption that takes the goal of climate neutrality seriously. Green startups are the key players here because they provide innovative solutions for climate protection and sustainability. What encourages you: Your share in start-up activity in Germany is growing. This is shown by the results of the Green Startup Monitor published today. After that, the share of green startups in the German startup ecosystem increased significantly compared to previous years to 30 percent of all startups in Germany.

The ongoing challenges of the pandemic have increased sensitivity for ecological and social tasks. The crisis is therefore an opportunity for green startups to demonstrate their added value. As the Green Startup Monitor 2021 shows, they make significant contributions to ecological and social sustainability beyond their potential for economic success.

Double dividends: Green startups create positive effects for society

“These innovative and growth-oriented young companies not only deliver convincing products, but also create positive effects for society as a whole”, emphasizes Prof. Dr. Klaus Fichter, director of the Borderstep Institute and co-author of the study. “So green startups are characterized by a double dividend .”

In addition to economic effects such as the creation of jobs and returns for investors (economic dividends), green startups also generate added value for society. This “social dividend” includes, for example, the contributions made by sustainable start-ups to the reduction of greenhouse gas emissions. With a view to the great challenges of the future, the so-called “Grand Challenges”, politics and society are urgently dependent on the use of this potential.

Green startups are pioneers in bringing fundamental innovations to the market

Against this background, David Hanf, Deputy President of the Startup Association, states: “Established companies are strong at improving existing products. Startups, on the other hand, are the pioneers who introduce fundamental environmental innovations on the market. Green startups therefore have a key function as the engine of a sustainable transformation. ”The present Green Startup Monitor makes it clear that sustainable startups have to struggle with high barriers in many markets, emphasizes Hanf, CFO of the Berlin start-up Thermondo.

“Raising capital in particular remains a major challenge, and it is getting worse. Every second green startup — and thus a significantly higher proportion than among the non-green ones — reports difficulties here, ”explains Prof. Dr. Yasmin Olteanu, Beuth University of Applied Sciences Berlin and Research Fellow at the Borderstep Institute. The co-author of the study emphasizes: “There is a particularly large gap between wish and reality, especially in early-stage financing and venture capital — and a significantly larger gap in comparison with non-green startups.”

Demand: Establishment of a “Sustainability” funding line for business with a future

The central demand of the team of authors is the establishment of a funding line ‘Sustainability’ and the expansion of state VC funding. There is a clear need for political action here. The Green Startup Monitor 2021 formulates recommendations for action on how existing competitive disadvantages for those who pay double dividends can be reduced.

As part of a “Sustainability” funding line, for example, the promotion of a network of regional “Sustainability Innovation Hubs” would improve the conditions for cooperation between green startups and established medium-sized companies as well as other actors in the startup ecosystem.

Green startups: engine of the sustainable transformation to climate neutrality by 2050

Green startups are the engine of the sustainable transformation to climate neutrality by 2050, which the European Green Deal clearly formulates as a goal. The around 6,000 green startups in Germany not only make an important contribution to climate and environmental protection with their environmentally friendly products and services, but are also an increasingly important economic and social factor with their sustainable jobs and social solutions.

According to the results of the Green Startup Monitor 2021, the share of green startups in all startups has risen to 30 percent. This corresponds with the increasing importance of ecological and social issues within the startup ecosystem in Germany.

Alexander Bonde, Secretary General of the German Federal Environment Foundation (DBU) also emphasizes this: “We see an incredible potential for innovation in the ‘green’ start-ups.” According to Bonde, they are adaptable, creative and digital. “Sustainable digitization can be a key to solving environmental problems.” The foundation has been supporting sustainable start-ups for the past two years with its own funding program.

The Green Startup Monitor was published by the Borderstep Institute for Innovation and Sustainability gGbmH in cooperation with the Federal Association of German Startups eV and supported technically and financially by the German Federal Environmental Foundation.