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Ten Reasons to start your Business in Germany

with 83 million citizens and a gross domestic product (GDP) of about 4 trillion US dollars

with 28 member countries Germany is a gateway providing access to the common market of 500 million people generating a gross domestic product (GDP) of about 20 trillion US dollars per year equalling to about 25% of global GDP (for comparison: USA 19 trillion USD, China 14 trillion USD)

with a mix of private and public organisations offering advise and funding. As per the Startupblink Startup Ecosystem Ranking Germany ranks no. 5 out of 125 countries (behind the USA, UK, Canada and Isreal) and after the coming Brexit planned for March 2019 it will have the leading startup ecosystem in the EU

after China and the US with the largest trade surplus powered by the German Mittelstand with its Hidden Champions, Germany ranks third in the Deloitte 2016 Global Manufacturing Competitiveness Index.

(ranked no. 4 after South Korea, Sweden and Singapore according to the Bloomberg Innovation Index 2017) with an excellent network of research institutes and a leading position in advanced production technologies (Industrie 4.0, see Readiness for the Future of Production Report 2018 by the World Economic Forum)

with a sound administrative and a good social security system. It is also very safe to live in (out of 38 OECD countries only the UK and Japan have a lower homocide rate).

including the unique dual vocational training system

as well as an international reputation for it as reflected in the “Made in Germany” brand, which has the best image according to the Anholt-GFK Nation Brands Index in 2017

with good infrastructure and ranked as the fourth best connected country out of 118 countries by the McKinsey Global Institute. in 2016 and ranked 7th out of 140 countries in the DHL Global Connectedness Index 2016

with the largest immigration number of all OECD countries in recent years resulting in the inflow of new ideas and a global outlook (19.3 million people, i.e. 23% of the German population, have a “migration background”, i.e. themselves or at least one of their parents were not born with a German citizenship); Germany is offering working visas for startup founders and qualified international employees (e.g. Bluecard for engineers, IT etc., see under “Legal” for more details)

The German Startup Scene

Germany has been ranked as the best country for entrepreneurship among 80 countries based on ten relevant attributes by US News / Wharton in 2018. “For the third consecutive year, Germany grabs the No. 1 position. True, creative energy does cluster in the country’s major cities, helping make Germany a startup haven.” (Also ranked in the top 10 best countries in the following categories: most modern, quality of life, power, most forward-looking, headquartering a corporation, most influential, transparency, green living, education, women and best countries overall.)

Munich (ranked 3rd), Duesseldorf (6th)  and Frankfurt (7th) are among the top ten cities globally with the best quality of live according to Mercer’s annual Quality of Living survey in 2018

The leading startup regions in Germany are Berlin (16,8%), Rhine-Ruhr Area (11,3%), followed by Stuttgart/Karlsruhe, Hamburg, Hannover/Oldenburg und Munich – all in the 6% range (KPMG Deutscher Startup Monitor). In addition other major startup regions include Frankfurt/Rhein Main Area and Leipzig/Dresden.

As per KFW 557,000 businesses (of those 234,000 full-time and 323,000 part-time) were founded in 2017 (14% less than in 2016). However, R&D driven startups increased by 31% to 76,000.

Startups are job creation machines and employ on average 13.2 employees including the founders (KPMG Deutscher Startup Monitor).

Top 100 German start-ups account for accumulated funding of USD 8.5 billion. Main cities were German investors are located: Berlin (21%), Munich (11%), Frankfurt (10%), Hamburg (8%), Stuttgart (6%)  (EY: Venture Capital and start-ups in Germany 2017)

The top 10 Venture Capitalists in Germany: High-Tech Gründerfonds (Bonn), HV Holtzbrinck Ventures (Berlin, Munich), Siemens Venture Capital (Munich),  Wellington Partners (UK, Munich),  Global Founders Capital (Berlin), EarlyBird Venture Capital (Berlin), Point Nine Capital (Berlin), Star Ventures (Israel, Germany), KfW Group (Frankfurt, Germany),  Deutsche Telekom Capital Partners (Hamburg) (Source: Dr. Hempel Network)

Deloitte Tech Hub Index for the German Top 10 Metropolitan Regions (out of 50 in total):

1 Munich
2 Berlin
3 Darmstadt
4 Hamburg
5 Stuttgart
6 Erlangen
7 Dresden
8 Frankfurt am Main
9 Karlsruhe
10 Aachen

News Ticker

Germany launches digital strategy backed with EUR 3 billion in public funding to become artificial intelligence leader (DW)

IW Consult together with WirtschaftsWoche und ImmobilienScout24 published the yearly German city ranking with 100,000 citizens or more. Munich scored first in the prosperity level ranking category and dynamic ranking category whereas Darmstadt scored no. one in the future ranking category.  The overall city ranking:  Munich (1st), Ingolstadt (2nd), Stuttgart (3rd), Erlangen (4th), Wolfsburg (5th), Frankfurt (6th), Regensburg (7th), Augsburg (8th), Darmstadt (9th) and Würzburg (10th). Hamburg (11th) drops out the top 10 compared to last year. In the future ranking category Erlangen (2nd) and Stuttagart (3rd) follow Darmstadt (1st).

KfW-Start-up-Report 2018 has been released in German. In 2017  the number of innovative startups (i.e. those conducting R&D or introducing a new product to the German market and founded within the last five years) in Germany increased by 16% from prior year to 108,000. As top three barriers for startups, who are innovative and fast growing (in total 29,000 startups) the following is reported: Gaining customers, financial risk and recruitment. Across all startup categories bureaucracy is major issue.

An interesting piece of research given some quantitative feeling for the high failure rate of startups “Dissecting startup failure rates by stage

Germany has been ranked third (after the US and Singapore as well as overtaking Switzerland compared to last year) out of 140 countries in the Global Competitiveness Index of the World Economic Forum. “How well countries adapt to the Fourth Industrial Revolution (4IR) will determine whether they ‘thrive’ or ‘stagnate’ …” Germany scored the top position in the subindex innovation capability and 2nd in the subindex business dynamism.

formnext, the international exhibition and conference on the next generation of manufacturing technologies, will take place in Frankfurt from November 13-16, 2018. In the „formnext Start-up Challenge 2018“ five startups received an award, two from Germany (AMendateKumovis), one each from France (Aerosint), the US (Fortify) and Canada (Nanograde).

More than 125 startups from the area of industrial tech and smart services – VR/AR, IoT, robotics, AI, block chain, and cyber security – will present their digital innovations at the Digital Demo Day 2019 in Duesseldorf on February 7, 2019.

In order to promote the startup scene in the chemical industry and related industries like biotech the Society of German Chemists (GDCh) , DECHEMA (expert network for chemical engineering and biotechnology in Germany), the VCI (Association of the German Chemical Industry) und the German Startup Association as well as the Business Angels Network Germany and the High-Tech Gründerfonds have joined forces to found the „Forum Startup Chemie“.

Huge Growth in VC Funding Means the Time for Europe Is Now (Entrepreneur Europe)

German Accelerator sets up office in Singapore to bring Germany’s tech startups to seek growth opportunities in Southeast Asia. Enterprise Singapore and German Accelerator will also collaborate on two landing pads in Germany for Singapore start-ups to access the German market (Source: German Accelerator)

Overview

Germany Trade & Invest (GTAI)

Insights into Germany’s Startup Scene (Deutsche Welle)

Taking off: A new breed of German startups (The Economist)

German start-ups attract record investment in 2017 (Financial Times)

Germany’s entrepreneurial climate is improving (with baby steps) (Handelsblatt)

Why German companies fail at digital innovation (Handelsblatt)

Venture Capital and startups in Germany 2017 (EY)

Profile of Germany in the Deloitte 2016 Global Manufacturing Competitiveness Index

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