Given global economic challenges, the German startup scene faced another challenging year, with investments in local startups plummeting by almost 40% in 2023, as indicated by an EY survey. While Germany somewhat aligns with the global average, it offers little comfort to the numerous young companies that fell into insolvency last year.

The question now is what the future will bring. Will there be a turnaround following the two-year market correction, or must founders brace for even greater challenges in capital procurement? And what can the ecosystem itself do to boost the willingness of strategic and return-oriented investors?

It is well-known that the answer to the latter lies largely in the development of sustainably profitable business models. With the interest rate turnaround, the focus of venture capital investors has shifted significantly from growth-oriented to profit-oriented investments. And start-ups are adapting. Last year witnessed widespread job cuts, and surveys indicate that companies plan to slow down hiring in the new year.

However, relying solely on business management is no longer sufficient. The future of German startups, and their investors, is increasingly likely to be determined by political factors as well, to which the startup scene must also respond. A recent example are the revelations from the Correctiv research center about deportation fantasies of senior AfD members. Such inhumane thoughts by German politicians are also noticed abroad and could severely jeopardize Germany's reputation as an open and innovative location.

Against this backdrop, the start-up sector should do what it is already pretty good at: Being loud, but now politically as well. Startups and organizations like the Startup Association or the Federal Association of Venture Capital must more frequently and publicly position themselves against anti-democratic and anti-economic trends in the country. They must find ways to effectively convey the significance of immigration for the prosperity created by startups and embed it in people's minds. With upcoming state elections in Brandenburg, Thuringia, and Saxony, where the AfD is currently leading, time is of the essence.