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Berlin’s Startup Crown Under Threat as Munich Gains Ground

While Berlin has long been the undisputed capital of tech innovation in Germany, Munich is steadily gaining ground—so much so that it now rivals Berlin in startup density and even outpaces the capital…
Berlin’s Startup Crown Under Threat as Munich Gains Ground

While Berlin has long been the undisputed capital of tech innovation in Germany, Munich is steadily gaining ground—so much so that it now rivals Berlin in startup density and even outpaces the capital in investment volume.


According to the Bavaria Startup and Scaleup Monitor 2026, Munich attracted €2.7 billion in startup funding in 2025, compared to Berlin’s €2.4 billion. This development underscores a broader trend: Munich is no longer just a contender; it’s becoming a serious player in Europe’s tech landscape.


Bavaria’s startup ecosystem is thriving, with over 4,400 active startups and scaleups—more than 20% of all new companies founded in Germany last year. Munich, with its 2,445 startups, is at the heart of this growth. Its startup density now matches Berlin’s, with 114 companies per 100,000 inhabitants, signaling a new phase of competition between the two cities.


One sector driving Munich’s rise is Defencetech, which saw investments exceeding one billion euros in 2025. The city is positioning itself as a hub for security technologies, attracting both national and international attention. The success of Munich’s startup scene is also rooted in its strong ties to research and academia: 55% of Bavarian startups originate from universities, with deeptech making up 16% of the ecosystem—well above the national average.


Yet, Munich faces challenges, particularly in internationalization. While 42% of its startup workforce comes from abroad, English is the primary working language in only 46% of companies, compared to 67% in Berlin. This discrepancy could limit its ability to compete for global talent in the long run.


For Berlin, this shift presents both a challenge and an opportunity. To maintain its edge, Berlin must double down on sectors like deeptech and Defencetech while addressing its own internationalization hurdles. The city’s vibrant culture and established ecosystem offer a strong foundation, but the race for supremacy in Germany’s tech scene is far from over.