If the emails I get these days are any indication, the VC world is enamoured with Munich.
As we’ve recently reported, the southern German city has long been vying to become a startup capital, with Bavaria minister president Markus Söder recently branding it as the “California of Europe”. Hot startups like AI defence firm Helsing and HR tech unicorn Personio count Munich as their home base, while the city’s famous Technical University of Munich is churning out deeptech companies. And local industry giants — like Siemens and SAP — are deep-pocketed potential clients for them.
Now, growth and late-stage investors are increasingly moving to the city, or opening up offices there — along with big banks and international law firms; another sign of its maturation as a startup hub.
“You can really notice that the international funds are trying to build up resources to have a bit more local presence,” one Munich-based growth investor recently told me. Nordic growth investor Verdane opened a Munich outpost in 2023, while Belgian private equity/VC firm Fortino Capital also set up shop in Munich two years ago. International law firms focused on M&A and private equity like Reed Smith and Morgan, Lewis & Bockius opened or added partners to their Munich offices last year. Banking giant Goldman Sachs has also opened a Munich hub.
Munich’s share of new VC funds raised in Germany has been on the rise for the last two years, following a drop in 2021, according to PitchBook data. That would track with the broader shift of investor interest into more B2B companies — compared to historically consumer-focused Berlin. The capital does, however, still receive the most investor euros.
Dominik Schwarz, who joined Verdane last year as partner to head up its new Munich office, says the decision to open a hub there had less to do with companies and more to do with potential hires. “You have a tremendous deep pool of talent coming out of the private equity world” in Munich, he says, noting the city has grown into a top hub for growth and mid-market private equity firms. “Proximity to deal flow is less important than proximity to talent.”
In the last couple of years, “Munich has become much more mature in that sense and is much more noticed by the investor scene,” the Munich growth investor told me. “New York investors come here every year to visit and meet the teams,” says Herbert Mangesius, founding partner of Munich-based deeptech firm VSquared.
Banks and law firms are increasingly setting up shop in the city to help late-stage companies with the next part of their journey, be it M&A or IPO. Dan Dees, Goldman Sachs’ co-head of global banking and markets, recently told Bloomberg he believes the region is primed for more deal flow and investments in infrastructure.
“This is really massive and I think this is the strongest signal; forget VCs,” Mangesius tells me, adding he’s been invited to Goldman Sachs’ office opening in June and has spoken with the managing directors there. “This is a long-term commitment and it signals something else than some funds, small or big, [opening] an office with one, two people.”
I’d love to hear from you, investors: have you thought about opening a Munich office, or have plans to open one? What are you seeing in terms of late-stage deal opportunities in the region? In what ways do you think Munich is still lagging other European tech hubs? I’m all ears.
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