The SME Manufacturing Tech DACH 50
Key insights about an opportunity waiting to be unlocked.
In collaboration with our friends and partners at Fortino Capital, our teams at āltitude and SME Tech Leaders have conducted an in-depth analysis of the manufacturing technology startup landscape in the DACH region (Germany, Austria, and Switzerland) in the past few months. This initiative builds upon our previous success in mapping Europe’s SME Vertical SaaS 50 alongside global growth-stage investor Eight Roads.
Our latest deep-dive research has culminated in key findings of the sector’s status quo and a market map of 50 SME Manufacturing Tech startups we selected to highlight some of the innovators tackling the challenges of manufacturing SMEs in the German-speaking markets.
The SME Manufacturing Tech DACH 50 (curated by Fortino Capital & āltitude)
SMEs – The Backbone of Manufacturing in DACH
Small and medium-sized enterprises (SMEs), often referred to in Germany as the “Mittelstand”, form the economic backbone of the DACH region. In Germany alone, SMEs account for 99.4% of all enterprises (source), employing approximately 55% of the workforce (source). These firms are predominantly active in sectors such as machinery, auto parts, chemicals, and electrical equipment. As of 2021, approximately 4% of manufacturing SMEs in Germany were classified as high-tech – more than double the EU-27 average of 1.9%. As a result, these companies accounted for a larger share of both employment (4.9%) and value added (6.5%) in Germany, compared to the EU averages of 3.2% and 5.1%, respectively (source).
Despite their economic importance, manufacturers are at a critical juncture, grappling with labor shortages, increasing production complexities, high energy prices, and the pressing need for efficiency – due to a multitude of converging crises and macro trends around the globe. The integration of advanced technologies, particularly AI-driven software solutions, is emerging as a key enabler for addressing these challenges.
The rise of smart factories, automation, worker augmentation, and predictive maintenance has the potential to reshape how small and medium-sized industrial businesses operate, making digital transformation no longer an option but a necessity.
SME Manufacturing Tech Landscape (Source: Fortino Capital)
Key Insights from Our Analysis
Our analysis of the SME Manufacturing Tech 50 in DACH revealed several patterns across geography, funding, technology focus, and team growth. Here are some of the most relevant takeaways that help paint a clearer picture of where the market is today and where it is headed:
Geographic Distribution – Germany leads the way in SME Manufacturing Tech innovation, accounting for 42 of the selected startups, followed by Switzerland (5) and Austria (3).
Technological Focus – The majority of chosen startups are software-first, with a strong emphasis on Manufacturing Execution Systems (MES), Quality Control, and AI-driven Predictive Maintenance. Emerging solutions including digital twins and smart factory automation are gaining momentum, optimizing production processes through simulation and real-time analytics.
Emerging Trends – The sector is witnessing a shift towards Industrial Internet of Things (IIoT), Operational Security, and Robotics, signaling the advent of autonomous manufacturing. Companies are starting to integrate edge computing, real-time monitoring, and cyber-physical systems to enhance operational resilience.
Startup Stage & Funding – About two thirds (66%) of the chosen startups were founded in the past five years (since the beginning of 2020). The majority of them are still in their early stage (Pre-Seed = 8, Seed = 18, Series A = 16), indicating a fertile investment landscape, while a few have reached the growth stages of Series B, Series C, and beyond. So far, the 50 selected companies have raised a total €922M, just shy of €1B, with an average funding volume of €18.44M (median = €13.25M). Only two of them have already been acquired.
Number of Employees – In total, the top 50 SME Manufacturing Tech providers are employing 3,036 full-time employees, with an average of 61 employees per startup (median = 30), showcasing strong growth trajectories across the sector.
Academic Background & Work Experience – A significant number of founding team members have studied a technical Bachelor’s or Master’s degree at well-known universities like Technical University in Munich (TUM) or Karlsruhe Institute of Technology (KIT) and gained first-hand experience at OEMs or other large industrial companies before branching out on their own.
The majority of chosen startups are still in their early stages, while half of the top 50 are focusing on manufacturing software.
Why Manufacturing Tech Adoption Lags
Despite playing their pivotal role in the DACH economies, years of excitement around Industry 4.0 and the accelerated digitisation triggered by the COVID-19 pandemic, the adoption of digital technology among manufacturing SMEs in the DACH region still lags behind. While large enterprises have made substantial progress in integrating AI, IoT, and automation into their operations, SMEs often struggle to follow suit due to financial constraints, technological complexities, a shortage of digital skills – and an often too cautious mindset.
The SME Mindset: Caution, Constraints, and Complexity
Several factors explain the hesitancy observed by many founders and operators in the market. First, many manufacturing SMEs maintain a deep-rooted focus on physical products and incremental improvements rather than transformative digital change. Their leadership teams often prioritize machinery upgrades or process optimization over software investments. Second, limited internal IT resources make it difficult to evaluate, implement, and customize digital tools effectively. Off-the-shelf solutions often fall short, while custom builds require time and capabilities SMEs do not have.
Even when the desire to modernise exists, the organizational complexity of manufacturing environments can act as a brake. As Boston Consulting Group (BCG) notes in a recent study (source), integrating lean and digital technologies can create a powerful feedback loop for operational excellence – but scaling these solutions across functions and factories requires coordinated investments in infrastructure, people, and workflows.
AI solutions are usually only accepted if they integrate deeply into the core workflows of SMEs and are explained well to the “users” that are working with them on a daily basis – “black box” solutions where it is not clear how the used AI functions in detail will face scrutiny also due to cybersecurity risks. With tight margins, volatile input costs, and talent shortages, many SMEs see experimentation as a risk they simply cannot afford.
Selling Is Just as Hard: Why GTM Strategies Often Break Down
The burden does not fall solely on the manufacturing SMEs. The startups building tech for them face an equally steep hill – selling digital solutions into this market is uniquely difficult. Implementation timelines are long. Even world-class, heavily funded software tools can take 5 to 6 months to fully go live – and in many cases, projects are abandoned mid-rollout if confidence wanes or operations are disrupted. Buyer skepticism is widespread, often rooted in bad past experiences with tools that overpromised and underdelivered, or in the fear of “breaking” production with an untested digital layer.
The sales process is rarely linear. Outreach may start at the managing director level, but real traction often happens further down, with innovation, digitalization, or continuous improvement managers. These internal champions still need to sell the idea to their superiors and colleagues – typically to engineers, plant managers, or shift supervisors who may be more concerned with uptime than with transformation. This bottom-up complexity means that even qualified leads can stall for months or fall apart without internal alignment.
Furthermore, regional and cultural nuances complicate things further. Even within a single multinational manufacturer, a digitization mandate from a DACH-based HQ can be rejected by a subsidiary factory in Eastern Europe or elsewhere that prefers a local vendor. Procurement teams are often price-sensitive, especially in Eastern and Southern Europe, and many SMEs strongly prefer buying from national suppliers and local talent. Some founders have even reported cases of IP theft, where prospective clients reverse-engineered concepts after exploratory calls and built them in-house or with local providers.
In this context, growth rarely follows a classic Software-as-a-Service (SaaS) motion. Outbound tooling (e.g., Telescope, Apollo, Clay) and marketing automation play a role in lead generation, but face-to-face engagement at trade shows or industry events still performs better – especially in markets where trust is earned through handshake relationships, not slide decks. Building a GTM engine in this segment requires deep patience, domain fluency, and a hybrid approach that blends digital and in-person tactics.
What It Takes for SME Tech Startups to Win
While adoption challenges persist on the buyer side, SME Tech startups selling into the manufacturing sector must focus on navigating challenges like long sales cycles, complex stakeholder dynamics, and high expectations around trust, integration, and ROI – by making go-to-market (GTM) execution just as critical as product quality.
GTM Excellence as a Core Capability
The most effective manufacturing tech startups treat GTM as a product in itself. Founders and operators from startups we engaged with during our research stressed the importance of iterating on GTM strategy just as rigorously as product development. This includes defining and re-defining the Ideal Customer Profile (ICP), validating use cases through field shadowing and workflow mapping, and recognizing when early traction is misleading – what some call the “double product-market fit” problem.
They also emphasized deep discovery before execution – spending time understanding not only how problems manifest but whether customers are willing to pay to solve them. Several teams intentionally delayed hiring salespeople or building features until they had clarity on buyer behavior, market dynamics, and messaging. Others resisted the temptation to pursue horizontal expansion too early, choosing instead to double down on the few high-friction, high-impact problems where they had true differentiation. The reality is that most industrial buyers do not want to be sold to – they want to be understood. Founders who succeed in this segment tend to be equipped with operational empathy, build credibility over time, and invest in hiring commercial talent with deep sectoral knowledge and strong customer intuition.
Timing & Talent
Timing is often a wildcard in a complex market. Some problems have been “ready” for years but were commercially unviable due to low tech readiness or buyer budgets. Others only become scalable when macro shifts – such as labor shortages or ESG regulation – create new urgency. As US venture capital investor Marc Andreessen (a16z) famously said: “Markets matter most.” (source) Even with a strong team and a great product, selling into a market that is not ready can be a dead end.
Lastly, investing in great people is never wasted. Many of the successful startups we looked at and interviewed created fertile ground for future operators and founders – what some liken to the PayPal or Klarna “mafia” effect. GTM or product excellence is not just about hiring people. It is about cultivating entrepreneurial thinkers across the business who understand how to identify, validate, and scale real customer value.
Conclusion – Implications for Different Stakeholders
Our research underscores a critical insight: while innovative manufacturing technology is being developed at an unprecedented pace with many early-stage startups having been founded in recent years, adoption among SMEs in the DACH market remains a challenge. This presents an opportunity for founders, investors, and industrial leaders to drive meaningful change by fostering collaboration and accelerating technology integration with the following implications for each stakeholder group:
Founders & Entrepreneurs: The market is ripe for real innovation, particularly for startups that offer automation solutions, predictive analytics, and workflow optimization. Founders focusing on these pain points and treating their GTM like a product are well-positioned to scale.
Venture Capital Investors & Their Limited Partners (LPs): The DACH region presents a high-growth opportunity for venture capital investment in manufacturing tech. The convergence of AI, IIoT, and automation creates a compelling case for backing startups driving the industrial revolution of the 21st century. Despite providing capital, helping startups with their GTM motion remains a crucial value-add.
Industry Leaders & SME Manufacturers: Early adoption of innovative solutions will be critical for the DACH region to maintain a competitive edge. Investing in digital skills training, automation, and real-time analytics by buying solutions provided by SME Manufacturing Tech startups will unlock productivity gains and operational efficiencies.
We invite stakeholders across the industry to engage with our findings and explore the comprehensive market map of the top 50 Manufacturing Tech startups in DACH. By bridging the gap between industrial expertise and digital transformation, we can collectively shape the future of manufacturing.
For an additional, detailed exploration of the potential of digital manufacturing technology, make sure to also read Fortino Capital’s analysis of “Why Now Is the Time to Build Manufacturing Software & AI Start-ups in Europe”.