Progress in Germany’s start-up strategy, for which 40% of 130 measures have been implemented, was presented to the German Bundestag on Wednesday (27 September), but doubts remain over its effectiveness.
Read the original article in German here.
A total of 52 of the 130 strategic measures of the German start-up strategy, adopted a year ago, have been implemented, according to Wednesday’s press briefing.
The strategy, adopted in July 2022, aims to make Germany a start-up nation and promote the country internationally.
The strategy’s action areas include a financial boost, more efficient talent acquisition, easier start-up conditions, promoting diversity and gender equality, improving framework conditions, facilitating access to data and strengthening regulatory sandboxes.
“We see challenges in assessing the ecosystem as a whole, which is of course not spared from the global crisis. However, eight out of ten start-ups say they would set up a business in Germany again. This shows that we are a strong location,” said Anna Christmann, head of start-ups at Germany’s Green Party Ministry of Economics and Technology.
“And two-thirds also plan to raise external capital in the coming year. Here too, we can see optimism among start-ups. This is a good signal for our economy and we want to continue supporting it,” added Christmann.
But not everyone is so optimistic.
“For the first time since the Start-up Monitor, a survey of around 2,000 start-ups in Germany, the assessment of the ecosystem in Germany has deteriorated, significantly deteriorated,” criticizes Hansjörg George, from conservative party CDU/CSU.
In line with these criticisms, several studies paint a much bleaker picture than the government’s progress report.
German start-ups received more than 3 billion euros in venture capital in the first six months of this year, almost 50% less than in the same period last year, according to the agency . EY Germany Startup Barometer.
This is also reflected in German Startup Monitor 2023which shows that outside of the 2020 pandemic, the business climate for start-ups is at an all-time low.
Report details
In its coalition agreement, signed almost two years ago, the current German government announced: “We will adopt a comprehensive start-up strategy” with the aim of promoting Germany as “the leading start-up location -up in Europe”.
Specifically, the government is committed to promoting key digital technologies, improving conditions for start-ups in the technology sector, facilitating market entry and approval, and giving women and people from immigrant backgrounds better access to financing and risk capital.
The progress report presented on Wednesday highlighted the positive developments in the start-up sector.
Between 2020 and 2030, the report projects an increase of around 560,000 start-up jobs.
There are also plans to introduce regulatory sandboxes to create real-world testing grounds.
“We have only reached 20 percent in the implementation of regulatory sandboxes,” said FDP MP Gerald Ullrich.
“With a regulatory sandbox law, we want to put safeguards in place so that the federal government, the states and the municipalities can actually create these spaces according to a regulated procedure,” Ullrich added.
To ensure that founders no longer have to “run from office to office to fulfill their bureaucratic obligations,” Ullrich refers to the one-stop-shop strategy. Founders “have one place, one point of contact, to whom they can send all the relevant data and who can also help them solve all kinds of problems,” Ullrich said.
Christmann highlighted two further measures: “I would like to mention two, the Deep Tech and Climate Fund, within which we explicitly provide 1 billion euros for direct investments in companies active in deep or climate technologies.
The Exist Women program is another measure aimed at attracting more female founders to the start-up scene.
“This program starts now. We are currently stagnating in the number of female founders. Around 20% is too low. We have to do better,” says Christmann.
“We need to ensure that women have access to capital and networks. And we need to ensure that women are more visible in the start-up scene,” added Werner of the Social Democratic Party.
Critics abound
However, other studies come to completely opposite conclusions, such as the German Start-up Monitor, which surveyed 1,824 start-ups, 1,459 founders and 1,925 employees.
According to the survey, nine out of ten respondents would be willing to create a start-up again, but 17% of them would prefer to create their next business abroad. Furthermore, collaboration between start-ups and businesses decreased by 10 percentage points to 61%.
“I would like to mention that conditions for start-ups in Germany have deteriorated over the past year, according to the founders’ assessment. This is clear from the Start-up Monitor,” said Left MP Alexander Ulrich, who also criticized the report.
“So your progress report is actually a regression report,” Ulrich said.
In addition to the German Start-up Monitor, the EY barometer also shows that the start-up environment in Germany has deteriorated. For the first half of 2023, EY found that funding volume declined for the third consecutive half year, representing a decline from pre-pandemic levels.
Fewer mega-deals were also closed: while there were 488 financing rounds a year ago, there were 402 this year, with a third fewer deals above €100 million and only half as many mega-deals between €51.1 million and €100 million concluded. .
More action in Brussels
The German government has also been urged to become more active within the EU to ensure a thriving start-up ecosystem.
“It would also be important for the German government to be more active in Brussels. This is where the important framework conditions for the capital market are set,” said Christian Democrat MP Klaus Wiener.
“In addition, in order to better mobilize private capital, it would be wise to knock on the door of Brussels more often,” added Wiener.
Ullrich, of the Free Democratic Party, said: “Only if we work together in Europe will young companies be able to develop here. Unicorns don’t belong in the stable, they belong in the enclosure.
“This is why the single European market must be more accessible to start-ups. There are still many obstacles to overcome,” he added.
(Edited by Nathalie Weatherald)
