Germany’s start-up scene
Germany offers comfortable conditions for the start-up scene, but there are still some hurdles.
The infrastructure is fine, the legal framework is in place and purchasing power is high: “This all creates a fertile environment for the growth of young enterprises,” says Tobias Kollmann, Professor of e-Business and e-Entrepreneurship at the University of Duisburg-Essen. Many of the 350,000 German start-ups in 2012 began as one-man businesses. According to a survey carried out by the Federal Ministry of Economics and Technology, the owners relied heavily on their savings in the beginning to realize their dream of their own business. The conditions are similar for German start-ups based on innovative business models and fast growth in turnovers or customers. But if the business wants to expand at the same time, the situation is trickier.
Professor Kollmann says that larger investments in young enterprises are rare in Germany, so this is where “new impulses are needed”. The management consulting firm McKinsey recently proposed the setting up of a 100 million euro private fund, just for businesses located in Berlin, to shoulder financing of more than three million euros. Up to now every fourth start-up in Germany has received growth capital from a company not based in the European Union. This was confirmed in a survey carried out by the German Startups Association. Winning an investor from the USA is often regarded as the ultimate distinction: the authors of the survey say it usually means that the business not only acquires more money and access to the American market, it also opens up a greater partner network.
The supply of qualified personnel is not always sufficient to meet demand in all areas. Entrepreneurs are desperate to find suitable graduates from technical courses. Observers have identified a need for reforms that would introduce entrepreneurship as a subject in schools. “Germany has the potential to offer not only its own young people a future in new growth sectors, but also to become a centre for international entrepreneurs and qualified personnel,” says Kollmann.
