Investment in Austrian Start-ups Declines

Investment in Austrian Start-ups Declines

Image: APA/Helmut Fohringer

 

Investments in Austrian start-ups have been declining for the past three years, reflecting the challenges posed by the current economic climate, according to accountancy giant EY.

The 2024 Start-up Barometer from EY shows total funding dropped by 17% from 2023, to €578 million – the lowest since 2020 – with the number of funding rounds also declining.

The analysis focused on companies based in Austria, founded within the last ten years. Overall, the number of funding rounds – the period during which companies seek investment – dropped by 19%, with 149 deals completed. Scale-ups, businesses in advanced stages of development experiencing rapid growth, were particularly hit.

“Large follow-up financings in the two- or three-digit million range are hardly feasible, which significantly complicates the implementation of long-term growth plans,” said Florian Haas, head of the start-up division at EY.

AI Sector Grows

In contrast to the broader decline, the AI sector has experienced substantial growth. More than one in four funding rounds (28%) in 2024 involved start-ups with a focus on AI. The total capital invested in AI-related start-ups reached €168 million, a sharp rise from €77 million the previous year.

“This clear focus from investors shows that AI is not just a hype but is seen as a key technology with enormous potential,” Haas said. Tech start-ups overall accounted for the largest share of funding rounds, completing 40% of deals in 2024.

Vienna Leads in Attracting Capital

Start-ups based in Vienna were the most successful in attracting investment, with a market share of 68%. Upper Austria followed with 18%, while Lower Austria accounted for 6%.

The largest funding sums were awarded to Gropyus, a Vienna-based company specialising in the sustainable development of multi-family houses, which secured €100 million. Storyblok, an Upper Austria-based business offering a flexible and modern CMS system, raised €74 million, while Prewave, a Vienna-based AI platform for risk detection in supply chains, raised €63 million.

A Call for Structural Change

Despite these challenges, the Austrian start-up ecosystem has professionalised and evolved over the past decade. However, experts emphasise the need for targeted measures to support further growth. “We need to address the structural problem of growth financing,” Haas said.

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