PitchBook indicated Germany’s private markets delivered a mixed performance in the first quarter of 2026, balancing robust venture capital momentum against a slowdown in private equity activity. According to PitchBook’s latest analysis, the quarter reflected broader macroeconomic caution, with GDP growth remaining subdued at 0.3% quarter-on-quarter in Q4 2025 and full-year 2025 expansion at just 0.2%.
Inflation climbed to 2.7% in March 2026—its highest since January—fueled by sharp rises in energy costs, including a 7.2% jump in motor fuel prices and a 44.4% surge in heating oil.
The European Central Bank kept interest rates steady at its March meeting, citing geopolitical tensions in the Middle East.
Venture capital proved the standout performer. Deal value surged 66.9% quarter-on-quarter to €4.1 billion across 187 transactions, despite a slight dip in deal count.
The rebound was powered by two major financings: NEURA Robotics secured a €1.5 billion round valuing the AI robotics firm at €5 billion, while Cloover raised €1.044 billion.
AI investments alone reached €3.5 billion in Q1—matching Germany’s entire 2025 total—highlighting the sector’s explosive growth in robotics, industrial applications, and productivity software.
Late-stage deals dominated activity, and median deal sizes held steady around €10–16 million depending on stage.
Private equity, by contrast, cooled after a strong 2025 finish.
Deal value fell 48% quarter-on-quarter to €13.1 billion across 183 transactions, down 19.4% in volume.
The retreat followed record momentum in late 2025, when quarterly values peaked at €25.2 billion. Exit activity offered a brighter note, rising 9.5% to €7.5 billion despite fewer deals.
Venture exits, however, dropped sharply to €0.7 billion across 22 transactions. Fundraising remained quiet on both sides: VC funds closed just €0.3 billion across seven vehicles, while PE raised only €0.1 billion.
Policy tailwinds could support future growth. Constitutional changes loosening Germany’s debt brake have unlocked substantial defense spending, projected to reach €162 billion by 2029.
This shift is already energizing private-market activity in defense technology, robotics, space, and industrial AI, with larger rounds materializing in these strategic areas.
Berlin continued to dominate the national landscape, leading in VC deal value (€22 billion cumulative) and PE transactions.
Munich and Hamburg followed as key hubs, underscoring Germany’s concentrated innovation ecosystem.
Compared to European peers, Berlin ranks behind only London and Paris in overall private-market scale.
Public markets echoed the caution: the DAX 40 fell 7.4% year-to-date through March, the weakest performer among major indices, with its price-to-earnings ratio easing to 17.3x.
Volatility stemmed from US tariff concerns and lingering geopolitical risks.
Overall, PitchBook’s latest research report portrays a German private capital market that is selective yet opportunistic—particularly in AI and defense—while awaiting clearer signals on rates, inflation, and global stability. With only modest fundraising so far, larger fund closes later in the year could accelerate momentum.
