Hi all,

Germany is widely regarded as an industrial powerhouse. When it comes to digitalisation, however, the country is not on the same level. (Although there is progress: Cologne's city council recently announced that fax machines are set to disappear for good – in 2028.)

So what’s up?

There are signs that German companies are starting to understand the potential of blockchains. Much work remains but we're looking at:

• A recent survey that shows increasing interest in enterprise adoption

• Venture capital for start-ups and tech entrepreneurs

Let’s get started! 🤓

Back in 2019, Germany looked like the country was set to become a leading player in the blockchain sector. The government launched a comprehensive strategy which stated that blockchain technology will be a building block for the internet of the future. No less than 150 experts had been invited to provide their input. 

Unfortunately, the strategy turned out to be similar to most people's New Year's resolutions: very ambitious and soon forgotten. Pilot projects were quietly abandoned or not even launched.

In 2022, a new German government launched another strategy. This one was its very own digital strategy. On 54 pages, the word 'blockchain' is included twice. In comparison, artificial intelligence gets more than 30 mentions.

It seems like the hype factor around AI is not limited to stock markets and venture capital funds.

Private sector is catching up

Outside of government offices, however, blockchain technology seems to be making slow and steady progress. Bitkom, Germany's largest association for the digital industry, recently published a survey to support that claim. It involved a representative sample of companies with at least 50 employees.

More than half of those companies believe that blockchain is an important future technology. At the moment, 5% of Germany's medium and large companies already use blockchain technology, 7% are at the test stage and another 19% are analysing or discussing future implementation.

Overall, that means that almost a third of the companies analysed here are at least somewhat interested in blockchains. Two years ago, the same survey found that 87% of all companies had not even looked at the topic at all.

Potential obstacles are equally interesting. Those include the limited availability of qualified staff, regulatory uncertainty and a lack of use cases. Many companies are also missing standardisation of blockchain applications; scalability issues are another concern. 

What about funding?

While blockchain adoption seems to be making progress, German tech companies have stepped up their fundraising game – albeit from a pretty low base. CV VC, one of the large venture capital providers in the sector, recently published the second edition of the German Blockchain Report.

 It shows that Germany achieved a global funding share of 2.4%. It doesn't sound like much for one of the world's leading economies, but it's progress from just 0.9% one year earlier. In absolute numbers, venture funding for the German blockchain sector stood at US$355, an increase of 3% compared with the previous year. 

That would be an impressive performance in a market which actually declined globally. One aspect, however, is hidden inside those numbers. More than half of the overall blockchain funding in Germany was based on Matter Lab's fundraising deal that was announced in late 2022.

It therefore remains to be seen how Germany's tech sector will fare in the next edition of CV VC's annual report.

Meanwhile, it seems that enterprise adoption of blockchains is set to increase in the coming months and years. It will be interesting to see to what extent this will benefit public blockchains such as Ethereum – including its layer-2 networks – or Solana.

That’s the end for today! 😢