Germany remains a tough landscape for start-ups

Germany today on Diplomacy Pakistan News

Despite all political statements to the contrary, Germany remains a tough environment for start-ups, according to experts.

The main problem is finance, where industry experts believe a paradox has arisen. The state now supports start-ups but domestic investors, whose capital start-ups need to flourish beyond the foundation stage, are as rare as ever.

This keeps promising German start-ups reliant on foreign investment – with the danger that, sooner or later, the technology leaves the country.

“With investors, there’s still a huge hole at the intermediate stage,” Carsten Rudolph, chief executive of Munich-based promotion agency BayStartup, told dpa.

“The first 1 million or 2 million euros (1.1 million or 2.2 million dollars) are no problem for most start-ups,” he says. “The investor scene for the early phase has thankfully developed well.”

The problems come later. “It gets difficult from 10 million euros upwards, when start-ups’ goal is to conquer the world.”

Rudolph says there are too few risk capital funds for this stage. “And, the higher they go, the thinner it gets.”

That means start-ups that want to grow are usually beholden to foreign investors, Paul Wolter, spokesman for the Federal Association of German Start-ups, told dpa. “Growth capital is a bottleneck,” he says.

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