Austria’s startup ecosystem has been lauded in recent years for its upward trajectory. Yet, the Austrian Investing Report 2024, published by invest.austria, paints a more nuanced picture.
While there are several encouraging signs—particularly in deal activity and angel involvement—the country still lags behind its European peers in critical areas such as fund size, international investment attraction, and later-stage financing.
Funding Drops, But Resilience Persists
Austria saw a significant decline in total funding in 2023, from €1.3 billion in 2022 to just €518 million—a nearly 60% drop. However, this mirrored broader European trends amid global economic uncertainty. What’s notable is the continued health in early-stage funding, particularly in pre-seed and seed stages. Roughly 52% of all startup deals in 2023 were under €1 million.
According to the report, this dynamic reflects a resilient early-stage environment, even if later-stage deals have slowed significantly.
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Vienna Dominates—But Regional Gaps Persist
Unsurprisingly, Vienna remains Austria’s epicenter for innovation, capturing over 50% of all deals and 70% of total funding in 2023. While this dominance is expected, it raises questions about regional equity and ecosystem decentralization.
Other regions, such as Styria and Upper Austria, did see some traction—especially in deep tech and green innovation—but the disparity remains sharp.
Angel Investors Are Stepping Up
A silver lining is the rising activity of angel investors. In 2023, 53% of founders said they received funding from angel investors, a considerable increase from the previous year. Moreover, angels were cited as the most startup-friendly funding source, outpacing even public grants.
However, the report also highlights the gender imbalance in this segment: only 5% of Austrian angel investors are women, underlining a need for greater diversity in decision-making roles.
Austria Lacks Growth-Stage Capital
Despite robust early-stage activity, Austria suffers from a dearth of later-stage capital. Only 11% of startups in 2023 raised over €5 million, and many founders report having to look abroad for Series A or B rounds.
Public Funding: Still a Pillar, But Not a Panacea
Austria’s public funding infrastructure continues to be vital, with AWS and FFG grants playing a key role in de-risking early startup formation. But over-reliance on these instruments may be problematic. Public money accounted for a sizable portion of total funding volume—especially in deep tech sectors.
“The public sector is too often a substitute for private capital,” warns one investor quoted in the report. “We need better alignment and handoffs between grants and private investors.”
Internationalization: The Missing Link
Austria’s startups are increasingly born-global, yet the ecosystem is still too inward-looking. Only 37% of deals in 2023 involved foreign investors, compared to over 50% in ecosystems like Berlin or Amsterdam. Furthermore, many founders cited the lack of international VC presence in Austria as a key bottleneck.
To change this, the Austrian Investing Report 2024 recommends more cross-border accelerators, LP engagement with international funds, and policies that reduce barriers for foreign capital.
A Call for Bigger, Bolder Funds
The average fund size among Austrian VCs remains modest, hovering around €30–50 million. This hampers their ability to write large follow-on checks or lead competitive later-stage rounds.
Final Thought
The Austrian startup ecosystem has strong foundations—talent, early-stage support, and a collaborative community. But if the country hopes to be more than a feeder system for international VCs, it must address the funding gap, attract more growth capital, and create fertile ground for startups to scale from Vienna to the world.
As the Austrian Investing Report 2024 puts it, “Austria is no longer a hidden gem—it’s a visible opportunity. But only if we invest like we mean it.”
