The start-up mentor in Frankfurt

Ram Shoham is driving the development of a start-up ecosystem in Frankfurt am Main: with his partner Maria Pennanen, the Israeli-born entrepreneur founded an accelerator in 2015 – and has assisted more than 50 start-ups in entering the market and finding investors. In May 2022 he also became head of the new Entrepreneurship Center at Frankfurt School of Finance & Management, a private business university.

Mr Shoham, what is the idea behind the Entrepreneurship Center at Frankfurt School of Finance & Management?

The Frankfurt School has a long history – it originally started as a banking academy. But a lot of students today no longer aspire to a career in a bank: they want to set up their own business. On the one hand, the Entrepreneurship Center is an incubator: students or graduates with a business idea can use our premises free of charge, get tips on how to get started and meet successful entrepreneurs and investors. On the other hand, we put on an accelerator programme during the semester break where we work closely with start-up founders on their ideas.

Is Frankfurt an attractive location for young entrepreneurs? Aren’t start-up founders in Germany more drawn to start-up cities like Berlin or Munich?

It’s true to say that there’s still a lot of room for improvement in Frankfurt as compared to other cities. But things are happening here. My current focus is on building a network around the Frankfurt School. A lot of graduates of the university now work in managerial positions in banks or medium-sized companies, have set up private equity firms or manage venture capital funds. I want to bring these people together with start-up founders. Start-ups are all about networks: You have to find people who believe in the idea and want to invest – or who know someone who might be interested.

Together with your partner, you founded Accelerator Frankfurt in 2015, a private company that promotes start-ups. How did this come about?

I previously worked in investment banking in Hong Kong for a long time. In my area we used to deal with financing company takeovers. During this time I met numerous entrepreneurs who built something of their own with true passion. That always impressed me – I tried my hand at setting up a software company myself when I was young. During the global financial crisis in 2008, takeovers came to a standstill. Instead of meeting exciting entrepreneurs, I was suddenly stuck in the office all day having to deal with administrative matters. That wasn’t for me. When I set up my own business, it was a great help to have built up a good network over the years.

Why did you choose Frankfurt?

I knew I could help start-ups in the area of IT security and finance in particular. At first I thought Hong Kong would be a good place to do this since all the big banks are represented there. But the important decisions are taken at the head offices. So then I started to consider cities like New York, London and Frankfurt. The argument in favour of Frankfurt was that there wouldn’t be as much competition here as in the USA – and in the wake of Brexit the city could be expected to gain importance as a location as compared to London.

At least 50 start-ups have gone through the programme at the Accelerator Frankfurt so far, many of them from Israel. Is that a coincidence?

No, I specifically attended conferences in Israel and spoke to investors there. Most Israeli start-ups that are drawn to Europe are geared towards London. Nobody had Frankfurt on their radar for a long time. But a lot of important banks are located here, and the German market is large. And anyone able to gain a foothold in a demanding regulatory environment will find it easy to expand into other European countries afterwards. Frankfurt has practical advantages, too: the cost of living is relatively low and the city is very well connected. There are several flights to Tel Aviv every day, for example.

Israel is barely larger than Hesse, but it has a disproportionately higher density of start-ups. Why is that?

The mentality is different. Germans are cautious and have high quality standards. That’s all well and good when it comes to building a reliable car. But in the start-up world, perfectionism slows you down. I know German start-up founders who spend ages tinkering with a website. It’s the same with product development. Israelis dare to start with a version that is not fully developed – and then learn from customer feedback. In Hebrew you have the term ”chutzpah”, which translates as something like “audacity”. That sums it up quite well.

Looking at things from the opposite perspective, what can Israeli start-up founders learn in Germany?

Some start-up founders are too brash – think they’re the next Steve Jobs. A few years ago, I arranged an appointment with Lufthansa for an IT security start-up. The start-up founders didn’t want to come to the meeting at first because they weren’t able to meet the IT boss straight away – the meeting had been arranged with someone from a lower level in the hierarchy. They didn’t understand that you have to start by slowly building up a trusting relationship.

You’re used to differing mentalities because you’ve moved around so much in your life: you were born in Israel, lived in Mexico and Spain as a child, studied in the Netherlands, and worked in Asia. Now you’ve been living in Germany for eight years. Are you now beginning to settle down?

Since becoming a father I no longer want to relocate on a whim. My son has grown up mainly in Frankfurt – he goes to school and has his friends here. And I like it here, too. Frankfurt is an Israel-friendly city, there’s a Jewish community. What is more, you can get out into the country quickly and hike through beautiful forests. It feels like home now.