When talking about startups we must mention Germany, a startup ecosystem that has been on the rise for quite some time now. The country has produced a number of global success stories including Sound Cloud, Zalando, Flix-bus, and Hello Fresh.
In 2019, the country was ranked number one in Europe for startups. That year, Germany’s top 100 startups received a total of $11.1 billion in funding, a significant increase from the $6.3 billion reached in 2018. But what makes German entrepreneurs so successful?
With over 130 Accelerators & Incubators across the country, Germany is a country made up of multiple Digital Hubs. While Berlin and Munich still dominate the country's startup activity, twelve smaller but flourishing Digital Hubs have popped up across the country, each specializing in a different area of tech based on its local resources, industry players, and specialized talent.
Depending on your industry, smaller cities with lower rents, access to specialized talent, and research institutes could make up a better environment. The growth of these specialized hubs is also helping to attract international investors looking for specific profiles.
Strong Industry Connections
Another advantage Germany’s Digital Hubs have is a strong connection to industry leaders, therefore, enabling connection between innovative and agile startups and more traditional corporations. These partnerships have been mutually beneficial with industry giants getting the innovation boost they need and startups gaining much-needed funding and support.
Talking in numbers we can see that Germany has the most active corporate venture investors in Europe: 91% of all non-IPO exits in 2019 were related to corporates. However, corporations still only spend 0.1% of their revenue on external innovation, so there is definitely a room for growth.
Berlin as a Startup Epicenter
With Berlin’s diverse startup scene involving over 2.000 active startups - a new startup being founded every 20 minutes - the city is expected to become Europe’s leading startup hub. Currently, with London claiming Europe’s No 1 position, Berlin is ranked 1st in Germany and 7th globally.
The city's geographical location in particular makes it a bridge between east and west, north and south, attracting talent not only from all over the country but from across the world. More than $2 billion got invested in Berlin during the last two years, importantly, with significant international interest in the startup ecosystem: about 44% of entrepreneurs in Berlin are not German. Not to mention Berlin plans to take first place in Europe as a center for entrepreneurial life in 2020. The city has already created over 60,000 digital economy jobs, with start-ups and software developers accounting for the majority.
Deep Tech Focus
Germany has placed a particular focus on fostering the growth of deep tech. The country ranks third place globally for the highest number of deep tech startups, after the US and China. AI & machine learning, logistics, mobility, and IOT are some of the country’s main strengths.
What really helps to make this possible is the spread of its universities and research institutes across the country that provides a place for innovation, entrepreneurship, and talent to grow.
The Government Support
German government has intention to continue growing its startup ecosystem in the future with the significant economic support it has shown during the crisis.
During the lockdown, the government introduced a €2 billion state aid package to keep struggling startups afloat. It also provided a 100% guarantee to all loans up to a maximum amount of $540,000 for small businesses with fewer than 50 employees and $868,000 for larger ones.
With flourishing startup ecosystem, events pay an important role in connecting entrepreneurs with growth, funding and development opportunities locally and internationally.
The Startup Berlin Club, led by Jamal Maxey, is dedicated to supporting German startup scene and presents the Germany-Italy Pitch Night on November 26th. The event will match Germany and Italy-based startups to industry-specific advisors and investors while providing opportunities for the general participants to interact.
by Roshan Hesham, Marketing Executive