Startups in Germany: Good Infrastructure and Many Funding Opportunities

Long driven by its huge industrial economy, since 2005 Germany has also begun to develop its digital industrial which is now becoming significant in terms of jobs and potential earnings (as well as the potential to innovate and integrate with the existing industrial structure). The development of a digital industry has become an important strategic policy role for the Federal Government.

In other economies, startups usually refers to a business in the technology sector, in areas such as e-commerce, online services and high-tech. In Germany the well established infrastructure of universities and research institutes, in addition to traditional businesses, are bringing their expertise and experience to the digital scene. The major research institutes–such as the Fraunhofer, Max Planck Institute or the Helmholtz Association–are creating many incentives for their employees to incorporate innovations and patents into digital business models.

The Federal German government has also produced an official Digital Agenda 2020, which establishes a strategic path for the digital economy to become internationally competitive and to make Germany the number one in Europe. It has also made available funding for students and researchers as well as funds to provide startup capital. This is largely through the Federal Ministry for Economic Affairs and Energy (BMWi), but there is a quickly growing reserve of private venture capital being invested in the sector.

There are numerous, well established private investors in Germany, including Rocket Internet and German Startups Group. Foreign investors also regard Germany as one of the most interesting locations worldwide with interest coming in particular from US investors. Almost 3.1 billion euros were invested in German Startups in 2015, which is almost five times as much as in 2013 and almost twice as much as in 2014.The main sectors have been online consumer services and financial technology (or FinTech) applications for the financial and insurance sectors.

Berlin is becoming a well known centre of the digital industry in Germany, currently leading other European centres in terms of investment in startups. However, the digital scene is not confined to Berlin and other successful startup cities include Munich, Hamburg, Cologne / Dusseldorf, Stuttgart and Frankfurt.

Internationally, Germany is viewed favourably as a startup location because of the strong business models, the excellent infrastructure, the research environment and the increasingly digitised and high-tech traditional industrial economy. The numerous accelerators and incubators in Germany are an indication that traditional industry is increasingly looking to close ranks with the startups of the digital economy.

Photo credit: “www.colourbox.com”. Material used in the preparation of this article has been drawn from Tatsachen über Deutschland.

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