Germany is Europe’s industrial powerhouse. Located in the heart of Europe, the country’s economic strength lies in its strong manufacturing base. Besides, it has a well-organized and mature startup ecosystem. In order to explore the potential of the German startup ecosystem, GINSEP is organising a digital trip to Germany for Indian startups and investors to offer them insights into the different startup regions. Here is a glimpse into the buzzing starthubs Berlin, Munich, Karlsruhe and Düsseldorf / Cologne which we will explore as part of the digital tour.
Berlin is Germany’s main hub for startups. 16.1% of all German startups are located here and more than 500 startups register annually in Germany’s capital. Berlin startups have received the highest funding in the country amounting to €3.5 billion in 2019, ranking Berlin second after London. The German capital has a vibrant startup landscape consisting of e-commerce, AdTech, AI and IoT startups including 11 Unicorns.
It is also a FinTech hotspot, 34.8% of all FinTech startups in Germany are based out of Berlin. For example, N26 is one of the highest valued FinTech startups in the world. Some of the other well-known startups include Delivery Hero which offers online food delivery and Zalando, an e-commerce company offering fashion and lifestyle products
Good quality of life, availability of capital and funding, a creative atmosphere, a number of business incubators and accelerators and international talent pool are among some of the main factors which have made Berlin a popular choice for startups and innovators. It is a melting pot of people, cultures and ideas. Furthermore, it offers many research and co-operation opportunities with more than 100 academic institutions.
Berlin has witnessed a rapid economic growth in the past years. Several companies like Deutsche Bahn, Deutsche Telekom, Pfizer, Siemens, Sony, Daimler and Vattenfall are located here.
Berlin Partner für Wirtschaft und Technologie GmbH, the city’s Startup Unit is the first point of contact for all startups and companies interested in establishing a footprint in Berlin. It provides information and guidance on company registration processes, visa application, identification of the right location and talent, funding opportunities etc. It works closely together with some other agencies including Business Immigration Service (BIS), IHK Berlin, Investment Bank (IBB) and the Senate Department for Economics, Technology and Research etc., to ensure a smooth transition for startups into Germany. Founders can benefit from various support programs like Berlin Innovativ through which startups could avail project financing up to €2 million. Berlin Start offers low interest loans up to € 1.5 million and Berlin Mittelstand 4.0 offers loans between €2 million and €6 million at low interest rates for innovative companies.
Munich is Germany’s second largest startup city with over 1,300 startups including 9 Unicorns. It has a dynamic, multi-cultural and well-connected startup community. The main sectors include HealthTech, AI, Mobility, Real Estate and GreenTech. Some of the successful startups located in Munich are Flixbus which is offering intercity mobility services, Celonis, a market leader in AI-enhanced Process Mining and Process Excellence, Ottonova, a provider of online health insurance and Kaia Health, a digital therapeutics company. Munich startups raised €1.4 billion in 2019.
The city is home to a set of large corporates like Siemens, Allianz, BMW Group, Munich Re, Osram, ProSiebenSat1 Media SE, Hubert Burda Media and other international tech giants including IBM, Google, Amazon and Microsoft General Electrics. Thus, it gives startups a potential access to B2B customers and business partners, thereby helping them to scale faster.
Munich also has a strong research landscape with several institutions like the Technical University of Munich (TUM), the Ludwig Maximilian University (LMU) and the Strascheg Center for Entrepreneurship (SCE), offering opportunities for scientific collaborations.
Munich Business Startup Office (MEB) is the central point of contact for starting a business in the city. It advises business founders on formalities, financial assistance, business planning and networks, among others. The state of Bavaria supports founders through different funding programs to start a company. For example, Bayern Kapital which supports hightech startups from the seed stage to growth stage with venture capital.
Munich which has a blend of tradition and modernity is becoming increasingly attractive for entrepreneurs.
Karlsruhe is an emerging starthub in Germany. Traditionally, the local startup scene has been dominated by ICT and DeepTech verticals. Other technologies such as smart manufacturing, smart city, production, energy, mobility and AI have given a further boost to the ecosystem. Some of the notable startups include Volocopter, offering urban air mobility services including the world’s first purely electric flying multicopter and GoSilico, an Industry 4.0 application for biopharmaceutical process development.
The city offers a solid base for businesses and hence is home to several innovative SME’s and big companies. EnBW, Siemens and Bosch are represented here, as well as international groups such as Michelin, LOréal or Stora Enso.
Karlsruhe has excellent research institutions such as the FZI Research Center for Information Technology, the Fraunhofer Institute for Optronics and the KIT, one of Germany’s premier institutes for technology. The special initiative – KIT Founders Forge – aims at supporting founders at the KIT.
Besides, entrepreneurs can profit from several accelerator and incubator programs in the city including KIT Hightech, CyberLab, AXEL Energy and upCAT.
Karlsruhe’s Economic Development Department is the single point of contact for new founders. It works closely together with other stakeholders to create a climate conducive to growth and innovation. The state of Baden-Württemberg has developed a broad range of tools to help businesses to successfully start their operations in the city. For example, VC Fonds Baden-Württemberg which provides equity capital to innovative companies in the seed, growth and expansion phase.
The state of North-Rhine Westphalia (NRW) has a dynamic startup ecosystem. Every fifth German startup is now founded in the state. The cities of Cologne and Düsseldorf are located in this region. The biggest sectors include InsurTech, AI, IoT, Industry 4.0, Gaming and HealthTech. Some of the prominent startups located here include Trivago, the world’s largest hotel aggregator, Springlane, an e-commerce company selling kitchen appliance brands and accessories and Silexcia which is offering software development tools for various applications.
The economic region is considered to be an important business location in Europe. It has as a wide array of industries offering excellent market opportunities combined with a large number of world-class universities that are creating a skilled talent pool. Many companies such as Henkel, Vodafone, METRO AG, Bayer, Procter and Gamble etc. are headquartered in the cities of Cologne and Düsseldorf. Some of the leading Indian IT companies like Wipro, Infosys, TCS and Mindtree etc. also have a base here.
Furthermore, there is a strong funding landscape due to the presence of players like Capnamic Ventures, Coparion, DvH Ventures and Tengelmann Ventures. The NRW Bank offers a broad range of funding options for startups. For example, NRW.SeedCap Digitale Wirtschaft offers equity capital for startups in cooperation with business angels and the NRW.BANK Start-Up Loan ranges from €25.000 to €10 million.
The economic development agency “KölnBusiness” and the Startup Unit of the Office of Economic Development Düsseldorf respectively are first points of contact for young innovative companies. They work closely together with other institutions like DigiHub Düsseldorf, Digital Hub Cologne, the IHKs and NRW Invest to support startups.
The cities of Düsseldorf / Cologne have a lively startup scene and offer sound conditions for setting up and scaling new businesses.