Berlin - Lawrence Leuschner's bet three years ago on mobility appears to have paid off. Leuschner, together with colleagues Julian Blessin and Matthias Laug, founded Tier-Mobility in Berlin. They're best-known for their green e-scooters.

The start-up barometer of auditing and consulting firm EY (Ernst & Young) shows the Berlin company reeled in €212 million in financing last year, putting it in third place in Germany behind used car site Auto1 and Munich air cab developer Lilium.

Twice a year, the management consultants at EY analyse the start-up scene in Germany and the capital still appears to be booming: the number of financing rounds climbed by 20 per cent to 314 in the past 12 months.

But don't celebrate yet. The city's biggest rival – Bavaria – was able to significantly close the gap in two areas as a decrease in deals made itself felt in Berlin: Total investment decreased by 17 per cent to €3.1b. In Bavaria, meanwhile, total investment remained nearly level at €1.51b (€1.55b a year earlier). The number of transactions also rose 36 per cent in Bavaria, with 176 deals, outpacing Berlin's 20 per cent.

Is something wrong with Berlin? EY partner Thomas Prüver rolls out another statistic to answer the question: In the number of financings, Berlin exceeded Bavaria, Hamburg and North Rhine-Westphalia combined.

Germany's capital scores points for its talent, diversity and internationality.

Berlin, Prüver says, still benefits from a strong network among start-ups, investors and universities. Germany's capital also scores points for its talent, diversity and internationality. For its part Bavaria, and especially the capital Munich, racks up points for its proximity to large companies.

The opposite was true in other classic German start-up hubs. In North Rhine-Westphalia, the number of transactions fell by 29 per cent to 62, in Hamburg 15 per cent to 46 and in Baden-Württemberg, home to Stuttgart, 17 per cent to 34. The three states also saw declines in total investment over 2019.

"There is indeed a corona effect in venture capital investments," says EY Germany CEO Hubert Barth. "However, this is primarily limited to a decline in very large deals."

The number of transactions with a volume of more than €100m fell from 13 to 8 in 2020. The founders of Tier, which raised €211m in November, were among the beneficiaries.  The money came from Softbank, considered the kingmaker of tech investors.

"As one of the largest high-tech funds in the world, its strategy is to build promising companies into market leaders with its multimillion-dollar investments. The Japanese investor's portfolio includes global brands such as Tiktok parent Bytedance, Wework and Uber," German trade site Gründerszene wrote of Softbank in November.

However, corona also left its mark at Berlin start-up Tier. Revenue fell during the lockdown along with people's movement, the company said recently. But the company also expanded into 40 new cities.

"We are the fastest-growing mobility company of all time, and since our launch less than two years ago, we have rolled out our service in about 80 cities, hired 700 people, and completed more than 30mn rides. And we're proving that climate protection and a profitable business are not mutually exclusive," Leuschner said late last year during an interview. 

While mobility suffered last year among the curfews and movement restrictions, health and e-commerce boomed, and will likely be reflected in investment.

But Prüver says the impact of corona still hasn't yet been fully realised: "It is still too early to sound the all-clear: Because of the suspended requirements for insolvency notification, it is not clear what the actual situation is for the many small companies that are not the focus of investors and are possibly financed entirely with their own funds."