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Jörn Menninger

This Month in German, Swiss and Austrian Startups - September 2024

Aktualisiert: 29. Okt.


Welcome to our September 2024 wrap-up with vital news from the startup and tech entrepreneurship scenes in Germany, Austria, and Switzerland. 


Our startup news is recorded with Chris, in New York City. Joe is joining from Frankfurt.

Today's news cut is September 23rd. As always, all news not included will be in our next news wrap-up. 


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Our Highlights:

This Fall will be HOT! September 2024 brought significant developments in the startup scene across Germany, Austria, and Switzerland. Key highlights include Intel's decision to halt its €30B chip factory project in Magdeburg due to cost-cutting measures and Northvolt's struggle with factory closures amid financial challenges linked to faltering partnerships with car manufacturers. Germany's WIN Initiative, backed by €12B until 2030, aims to revitalize the startup ecosystem with a focus on boosting innovation and venture capital. In Austria, the Vienna-based AI startup Magic secured $320M in funding led by former Google CEO Eric Schmidt, underscoring a growing trend of major investments in AI and tech-driven solutions.


The quick commerce sector remains resilient, with Flink raising $150M to expand in Germany and the Netherlands. The Swiss startup Magic topped the 2024 Top 100 Swiss Startup Awards, showcasing continued innovation in the region. These developments reflect a dynamic and evolving startup landscape in the DACH region, emphasizing the importance of strategic investments, government initiatives, and market adaptability.


Let's talk startups.


Schedule 

Today is German Unity day, a public holiday across the country. Most people will take Friday off to have a 4 day weekend. So we thought we would use this opportunity to give you a bit more extensive news episode if you already have some free time on your hands. 


We are back on our regular schedule. Expect the news to drop every last Thursday a month and our last regular episodes Thursdays until December 19th. 


The Video Podcast Will Go Live on Monday, September 2nd, 2024


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The Audio Podcast Will Go Live on Monday, September 2nd, 2024


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This recording is supported by HTAI and the Enterprise Europe Network Hessen


This recording was made possible by HTAI and the Enterprise Europe Network Hessen. These organizations have made tremendous contributions to helping startup businesses succeed and thrive, providing a range of services from helping to find grants to ongoing partnerships. By taking advantage of these resources, startup companies can network and develop innovative strategies for success on the international stage. The dedicated support of HTAI and the Enterprise Europe Network Hessen is paramount in providing startup businesses with the tools for lasting success. Look for our dedicated sub-podcast in partnership with them: Tech Startups Germany on our https://linktr.ee/startupradio 


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Top News


SellerX: From Unicorn to Near Auction - The Fall of a Prominent Amazon Aggregator

SellerX, once a celebrated unicorn in the Amazon aggregator space, has faced a dramatic downturn, narrowly avoiding a public auction. Originally modeled after Thrasio, SellerX raised $800M and rapidly acquired Amazon brands, including KW Commerce. However, financial challenges mounted, with layoffs beginning in 2022 and the insolvency of Thrasio casting a shadow on the sector. In September 2024, SellerX's major creditor BlackRock threatened a public auction due to unpaid interest on a €400M loan, only to cancel at the last minute amid ongoing negotiations to restructure the company’s capital. This situation underscores the volatility of the aggregator business model, heavily impacted by rising interest rates and integration struggles.


Intel Halts €30B Magdeburg Chip Factory Amid Financial Woes

Intel has put its €30 billion chip factory project in Magdeburg on hold for at least two years, citing cost-cutting measures and ongoing financial struggles. Despite a €10 billion investment pledge from the German government, Intel's decision delays the factory's construction, risking the expiration of building permits. The setback is part of a broader restructuring strategy, as Intel grapples with heavy losses and aims to save over $10 billion by 2025. While local projects like the Elbewasserwerk and High-Tech Park in Sülzetal will continue, Intel's move raises concerns about the future of one of Europe's most significant tech investments, underscoring the challenges facing the global chip industry.



Northvolt's Battery Empire Faces Uncertainty Amid German Auto Industry Crisis

Northvolt, Europe's leading battery manufacturer, is grappling with severe financial difficulties, factory closures, and layoffs due to troubles linked to key automotive partners like Volkswagen. The company, which raised $15 billion since its founding in 2016, aimed to revolutionize Europe’s battery sector with major investments, including a €4.5 billion project in Germany supported by public funding. However, with VW's ongoing crisis and cancellations of major orders, Northvolt's ambitious expansion plans, including new factories in Germany, Sweden, and Canada, are now in jeopardy. As Northvolt seeks additional funding, the future of its role in Europe's green energy landscape remains uncertain.


Germany’s WIN Initiative: A €12 Billion Boost to Revitalize the Startup Ecosystem

Germany's WIN Initiative aims to supercharge its startup ecosystem by mobilizing €12 billion in investment by 2030, positioning the country as a leading hub for innovation and venture capital. Supported by key players such as Deutsche Bank, Allianz, and KfW, the initiative was launched with a joint commitment from the government, financial sector, and startup community. The initiative seeks to improve access to growth and innovation capital, streamline regulations, and encourage private investments in young, dynamic companies that drive technological advancements and economic growth. This strategic move is expected to enhance Germany's competitiveness on the global stage, particularly in tech and sustainability sectors.

The WIN Initiative's objectives include bolstering the venture capital market, improving exit conditions for startups, and integrating institutional investors into the funding landscape. German Finance Minister Christian Lindner and Economic Minister Robert Habeck emphasized the need to cut red tape and create a more favorable environment for startups to thrive. By drawing on the momentum of previous funding efforts like the Zukunftsfonds, which has already invested €3.3 billion out of €10 billion, the WIN Initiative aims to further strengthen Germany's position as a key player in the global startup scene, fostering a culture of innovation and reducing the dependency on subsidies.


Magic AI Raises $320M: Vienna-Founded Startup Reaches Unicorn Status Under Former Google CEO’s Lead

Vienna-founded AI startup Magic has secured a massive $320 million investment, led by former Google CEO Eric Schmidt, signaling its potential entry into unicorn status with an estimated valuation of $1.5 billion. The round saw participation from top investors, including Jane Street, Sequoia, and Atlassian, alongside existing backers like CapitalG and Andrej Karpathy. Magic, founded by Austrians Eric Steinberger and Sebastian De Ro, focuses on AI-powered developer assistance software, aiming to revolutionize coding with human-like interaction capabilities. This latest funding will fuel further development, including building “Supercomputers” on Google Cloud, positioning Magic as a key player in the AI landscape.

This recent investment follows Magic’s $117 million funding round in February and an earlier $23 million round in 2023, highlighting the startup’s rapid growth trajectory. Magic’s software leverages Large Language Models (LLMs) to assist developers in real-time, akin to GitHub’s Autopilot. With Schmidt’s leadership and substantial backing from renowned investors, Magic is poised to drive significant innovation in AI-driven developer tools, making it a standout player in the tech world.


Quick Commerce is not Dead Yet 

Flink, the Berlin-based quick-commerce startup, has raised $150 million in a fresh funding round to double down on its operations in Germany and the Netherlands. Backed by investors like BOND, Mubadala, and supermarket giant REWE, this latest funding aims to bolster Flink's market presence through a strategic partnership with Just Eat Takeaway, with plans to open 30 new hubs by 2025. Despite previous valuation highs of nearly $5 billion, Flink's current valuation sits just below $1 billion, reflecting the volatility in the quick-commerce sector.


Flink plans to achieve profitability by Q2 2025 by focusing on operational efficiency and expanding its network of 146 hubs across 80 cities. The company expects to generate $600 million in gross revenue in 2024, marking a 20% increase from 2023, as it targets an average order size of $40. With 8,900 employees and a renewed focus on core markets, Flink is set on proving that quick commerce still has a future, driven by strategic scaling and enhanced customer service.



Housekeeping & Time to Brag 


Chris’ German podcast on the US Election: “Bei Burger und Bier”  https://burgerundbeer.podbean.com/


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Ecosystem 

World

  • 🔍 M&A market predictions from GP Bullhound’s Simon Miremadi: Expect HR tech consolidation, growth in industrial software, and more PE funds snapping up VC portfolios as VCs chase liquidity. Are you ready for a back-loaded 2024? 🚀 https://sifted.eu/articles/m-a-predictions-vc-banker 


Europe


Austria


Germany



Hubs

Here we want to highlight some hidden gems and cities of general startup interest. We focused on assigning as many news to cities as possible. As always: The order of the news in the order they came to our attention.


Frankfurt - Rhein/Main


Mainz


Leipzig


Düsseldorf


Augsburg


Note: Keep in mind that we moved the fundraisings from Austria and Switzerland to the respective section towards the end of the news.  


Austria 


Switzerland

General News / Tech News / Companies News Section 


VC News and New Funds, in case you are looking for money (also only a selection):


Green Tech News 


Fintech News 


General News 


Schumpeters Schöpferische Zerstörung ⇒ Creative Destruction Still Ongoing: 


End on a High Note: Successful Fundraisings and Exits: 

Keep in mind this is a small selection. The news here and their total value show how resilient the startup scene is. We included only selected fundraisings above 5 million Euros or USD. There were so many announcements that we could not include ALL funds raised. We will only bring you highlights here. Note: Fundraisings from Austria and Switzerland are included.



Stay Ahead of the Curve

  • It was already a lot this month. Nothing to see here :-) 


Feedback

We are always looking for ways to make the show better. Please take this opportunity and share your feedback with us! We would love to hear from YOU!!!

The Hosts

The news are co-hosted by Jörn “Joe” Menninger, startup scout, founder, and host of Startuprad.io. And Christian “Chris' ' Fahrenbach, co-founder Startuprad.io, freelance reporter, lecturer, author and blogger . Reach out to them:


Keep Up to Date

About us: Stay ahead of the curve with Startuprad.io

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