UG forces you to retain profit to hit a capitalisation target. An Ltd is a real company, and my £1 company has an identical legal status to one with hundreds of millions of pounds of assets.

Yes, there's a difference. But the question is whether that difference actually matters in practice.

If you're a startup, you won't be making a profit anyway.

Once you make a profit, 25k€ on the books (not necessarily cash) isn't a lot, especially as it doesn't have to remain in the company, you can use it to pay wages once converted to a GmbH.

In the end, this is a question about whether you need something to be exactly the same for some ideological reason, or whether it's enough that two things are practically the same for all intents and purposes.

And while in this case the German system requires a codified workarounds, in many other cases the US/UK/Commonwealth systems use significantly more complicated workarounds than the German system.