Start-ups: Deutschlands Biotech-Hauptstadt München lockt die Wall Street

In 2016, the German biotech startup Tubulis was sold to the USA for $5 billion, showcasing the potential of Munich's biotech ecosystem. The city is the best German biotech region, with more startups than anywhere else. However, despite having numerous ideas, entrepreneurs, and research excellence, few achieve success, primarily due to a lack of capital.

JP Morgan, the largest bank in the USA, has recognized Munich as a center for a new business venture, aiming to attract billions of private wealth into Bavarian biotech firms. JP Morgan recently hosted the first-ever Life-Science Forum in Munich, attracting almost all major and emerging players in the US pharmaceutical and biotech industries to showcase their innovations to prominent investors.

Matthias Musch, head of JP Morgan's Private Bank in Southern Germany, believes this is not a one-hit wonder but a long-term commitment. The business model involves connecting founders and investors, financing rounds, IPOs, and acquisitions. To understand why a Wall Street bank chooses Munich, one must look at the density of the location, which includes universities, incubators, funding programs, startups, and investors.

Alongside LMU, other institutions such as the Technical University of Munich and several Max-Planck-Institutes conduct research in the area. The Biotechnology Innovation Center (BIz) in Martinsried nurtures young companies. Global investors such as EQT Partners, Andera Partners, and Forbion are also present in Munich. The numbers demonstrate that the model works.

Bavaria is Germany's strongest starting region with 785 startups in 2025, a 46% increase from the previous year. Munich has attracted €2.7 billion in startup capital, surpassing Berlin. While this is still small compared to US founding regions, experts see potential: "All the ingredients needed for the Life Sciences sector to grow are present here," says Musch.

"We want to be the sector that grows in this ecosystem for early and growth-stage companies," says Elena Lovo, head of JP Morgan's Life-Science business for Europe, the Middle East, and Africa. The challenge for young German firms like Tubulis is that they eventually hit a funding limit, often leading to sales to capital-rich international players, mainly from the USA.

JP Morgan aims to be a long-term partner for these companies to become global champions. Philipp Baaske, Vice President for Entrepreneurship at LMU, hopes for more homegrown biotech companies that can fund venture and equity capital, closing the cycle and keeping money within the system. The missing piece in this cycle is private capital to turn good ideas into global companies.

Only four biotech IPOs occurred in Europe in the past year, compared to 26 in the USA. The funding gap is particularly heavy for biotech, as it takes up to ten years for a drug to reach approval and start generating revenue. Early support, whether from the state or early-stage funding funds, is difficult to maintain as companies grow.

Private investors and family offices with wealthy families' wealth are expected to provide the necessary capital. Musch believes the capital is already available, as many investors currently park their money in government bonds. Musch points to success stories like Thomas Strüngmann, the main shareholder of Biontech, who invested in Life Sciences instead of ETFs ten years ago.

Such stories need to be shared more in the market. While money alone cannot keep a company in Bavaria, some are advocating for Munich to become a special economic zone. This would involve changing financing conditions to allow pension funds, insurers, and other institutional investors to invest more heavily in growth companies within the zone.

LMU entrepreneur expert Baaske suggests loosening the protection against dismissal for young growth companies as a special regulation in the zone. The zone should not be a tax haven but an experimental space to turn startups into global companies. Germany must also address taxation issues.