by Mathias Falcenberg
Germany is home to world-class research institutions and scientific talents, yet all too often, breakthrough biotech innovations are lost in commercial translation. However, recent developments give signs of hope: the German federal government is taking steps to incentivize innovation, with a €10 billion equity fund for deep tech ventures (the ‘Zukunftsfonds’), the WIN initiative, and the launch of ‘Startup Factories’ aiming to elevate the entrepreneurial ecosystem. Still, despite encouraging signs, the country’s biotech sector is still sluggish due to several significant barriers.
Struggles moving from lab to launch
While German academic institutes produce cutting-edge science, many discoveries struggle to reach the market because the spin-out process from universities is often complex and slow. In countries like Austria, The Netherlands, or Belgium, licensing terms are standardized, and early investors like V-Bio Ventures work closely with the tech transfer offices (TTOs) of institutes like VIB to streamline spin-out creation. By contrast, German institutions often negotiate licensing, and equity deals on a case-by-case basis, meaning that founders often find themselves tangled up in lengthy negotiations, frustrated and at odds with their potential investors.
There’s also a cultural bias against risk—something inherent to entrepreneurship—and a sense that the academic “publish or perish” mentality remains superior to the drive for venture creation. For many, this bulky system undervalues enterprise and dampens entrepreneurial momentum. Some start-ups—like successful spinouts Tubulis and CatalYm—have been able to navigate this system successfully. But for many German researchers, the lack of encouragement and framework leads to terminated plans.
Scarcity of early-stage funds
Even for those who do manage to found a company, accessing early capital remains a challenge. Despite government initiatives, pre-seed and seed-stage venture funding remains scarce, and public grants—while valuable—aren’t always fast or flexible enough.
This is compounded by the historic scarcity of German seed funds. Additionally, German VC funds that started out investing in early-stage assets have increasingly shifted their focus to later rounds as they’ve grown, effectively vacating the seed-stage space and leaving many start-up founders high and dry.
Some pools of early-stage funding still remain. Programs like GO-Bio, EXIST, VIP+, and SprinD have helped launch promising ventures, and Startup Factories are already being piloted in 10 different regions throughout the country. However, Germany still lags in venture funding relative to its economic size. In 2024, only 0.02% of the country’s GDP went to venture capital—less than the UK (0.05%) and well below Denmark or Switzerland (0.07–0.08%).
Scaling up is dependent on outsiders
Later-stage financing presents another type of obstacle for companies. While Germany now attracts international investors, domestic VCs are rarely the lead backers in major Series A or B rounds. In 2024, only around 13% of lead funders in German biotech deals were local.
On the one hand, this international attention reflects the strength of German science—but on the other hand, it highlights a strategic gap. Without more domestic leadership in later funding rounds, companies remain dependent on U.S. and pan-European investors, whose priorities may not align with building sustainable biotech ecosystems in Germany.
How to wake the German giant?
Germany’s biotech ecosystem is evolving, and the key ingredients for success are already in place: excellent science, public support, and experienced talent. All that’s needed to turn potential into progress is coordination, cultural change, and capital.
Three priorities stand out for Germany’s biotech sector. Firstly, to standardize spin-out processes through streamlined, founder-friendly licensing terms that accelerate translation of research. Secondly, to bridge the funding gaps by incentivizing seed-stage investors and fleshing out the later-stage German funds. And thirdly, to foster repeat founders, by supporting entrepreneurial role models and offering career paths that reward entrepreneurial spirits.
With these shifts, Germany could turn its long-standing promise into performance—waking its sleeping giant not with a bang, but with sustainable, undeniable momentum.
