VCs Hunt for Software Startups as Berlin Loses Crown

VCs Hunt for Software Startups as Berlin Loses Crown
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Despite a lack of big consumer deals, and Berlin losing out to London as the European hub of venture capital, German investors have notched an up-tick in deals over the first quarter and are on the hunt for software startups, according to Bloomberg.

Venture capital firms invested $467 million across 87 equity deals in German-based startups in the first quarter, according to data from researcher CB Insights. That compares with $356 million across 91 deals in the first quarter of last year.

However, this is down from $556 million invested in the fourth quarter of 2016, and thanks to a death of big consumer deals, Berlin, Europe’s top destination for VC funds in 2015, fell to fourth place behind London, Paris and Stockholm last year, according to new data from EY.

The stronger start to the year will be welcome news for entrepreneurs after a tough 2016. VCs invested just $1.9 billion in 345 deals in German companies last year, compared with $3.6 billion across 407 deals in 2015, according to KPMG.

Last year failed to see a return of the super-sized funding rounds in companies backed by Berlin’s startup factory Rocket Internet SE, such as a $563 million stake in food-on-wheels service Delivery Hero in February 2015. VCs are now looking for startups that can wed Germany’s software programming expertise with the country’s strengths in engineering and high-quality manufacturing.

U.K.-based investors are becoming increasingly interested in investing in German technology. 83North, a venture capital firm with offices in London and Tel Aviv, is targeting European investments as the expense of the U.K., due to the country’s decision to leave the European Union.

U.S. investors are also inking deals. Raisin, a Berlin fintech that seeks the best interest rates for European savers, raised $32 million from investors including Thrive Capital, founded by Joshua Kushner, the brother of President Trump’s son-in-law and adviser.