The German startup sector pales in size and clout to the industries that traditionally steer the economy, from carmakers to steel producers. Yet what they lack for in size, startups make up for in promise.
Image: DW/S. Beardsley
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By applying innovations to modern business practices, startups have disrupted once settled markets and helped larger, more established German firms move toward high-tech, digitized solutions. Now startups want a firmer foothold in the political conversation. But to what end?
Less than three weeks before Germany's parliamentary election, a panel discussion sponsored by Stanford University and held this week at one of Berlin's startup incubators offered a glimpse into the discussion. From reducing bureaucracy to encouraging digital education and supporting later-stage startup growth, panelists questioned how much government support was needed by a sector that, to this point, has grown with very little of it.
For Travis Todd, the co-founder and CEO of the incubator, Silicon Allee, the issue comes down to keeping Germany a more attractive base for entrepreneurs and a competitor against growing startup hubs elsewhere in Europe.
German startups in Silicon Valley boot camp
Reworking business plans, improving and practicing pitches to investors: Nine German startups are getting intensive training at the German Accelerator in California. And the training really is intensive...
Image: Imago/Westend61
Hard graft in the gold-rush city
Nine German startups have a temporary new home in San Francisco. Their founders are spending four months in the "German Accelerator," a bootcamp supported by Germany's federal government for startups with US-relevant products. They're tinkering with their business models, getting coached by mentors, making contact to new potential investors... It's both a huge opportunity and a tough challenge.
Image: Imago/Westend61
The bicycle, re-invented
They're calling it Cyfly. It's a novel bicycle crankset that's designed to more efficiently translate a cyclist's leg-pumping efforts into the bicycle's forward motion. Marcus Rochlitzer, Julius Legenmajer and Frederik Wassmann of Möve Bikes are in Silicon Valley to develop deals with US bicycle makers. A difficulty: They're nine time zones earlier than their colleagues at Möve's HQ in Germany.
Image: DW/G. Hofmann
Software for 3D printers
Aleksander Ciszek has already found his first US clients, after only a month in Silicon Valley. The 32-year-old founded 3yourmind in Berlin in 2014. The online platform allows users to compare prices for 3D printers, upload files, and order products. 3D printing is booming in the USA. Aleksander wants to stay - but can he get a green card?
Image: DW/G. Hofmann
IT systems optimisation: DACS Laboratories
It's hard to explain DACS Labs' product line in plain English, given that DACS focuses on specialised services in speeding IT data transfer, server management system, and IT security infrastructure optimisation. Frank Schwarz, Dennis Maennersdoerfer und Björn Caspers are from a small town near Düsseldorf. It's a world away from Silicon Valley, but so far they seem to be adapting well.
Image: DW/G. Hofmann
Restube: Portable watersport safety
The US is the world's biggest water-sports market. It's best to have a life-vest handy out on the water - but vests are bulky. Christopher Fuhrhop designed a solution: A tube that inflates when you pull a cord. It folds away into a small hip-mounted pocket when not in use. It offers extra safety to surfers, sailors, and swimmers, without getting in the way.
Image: DW/G. Hofmann
Replex: A tool for data center managers to regain a system overview
As data centers grow in size and complexity, the ability of managers to maintain an overview of the whole system suffers. For Costantino Lattarulo, that presented an opportunity. His startup Replex developed a tool that enables visualisation of a company's IT infrastructure. 60 perent of his target market is in the USA.
Image: DW/G. Hofmann
Webuyyourcar.com: Cars, clients, USA!
Backed by a family-owned company called Auto-Jesse and by Daimler corporation, Webuyyourcar.com is an online trade-in service that "does nothing other than buying cars." People can get the value of their car estimated and then sell it quickly and safely. The US car market is both huge and complex. Nico Wimmer and Carlo Jesse are interviewing scores of clients and experts to nail it down.
Image: DW/G. Hofmann
Sand Hill Road: The Vatican City of technology venture capital
Like the rest of Silicon Valley's suburban sprawl, Sand Hill Road looks like nothing in particular. But for those in the know, it's a global epicenter. It's here that many of the leading US venture capital firms have their head offices. Kleiner Perkins Caufield & Byers or Andreessen Horowitz, for example. German startups rarely get big investments from Sand Hill Road VCs.
Image: DW/G. Hofmann
Antelope sportswear: Electric currents stimulate muscles during workouts
Theresa Schnepp is one of two women taking part in the German Accelerator program. Antelope, the startup she works for, produces clothing for athletes that stimulates muscles with mild electric currents, which increases the efficiency of workout sessions. Her boss sent her to Silicon Valley to learn from US coaches how to to pitch to American investors.
Image: DW/G. Hofmann
Appinio: The world's fastest market research
What's the market like? What do the customers want? Jonathan Kurfess worked for a major German corporation, where each market research project took weeks of work and costed thousands of euros. He quit his job and designed Appinio ('app' + 'opinion'), a mobile app that makes market research much faster and much cheaper. The US is Appinio's own next target market.
Image: DW/G. Hofmann
Haveitback.com: A global online lost & found app
Antonio Vega says Haveitback, an online lost-and-found peer-to-peer marketplace, already has about four million entries. The platform enables searches and allows people to register losses, upload photographs, and offer rewards for getting their stuff back. Four million is a small proportion of the market potential: People lose valuables an estimated 800 million times each year in the US alone.
Image: DW/G. Hofmann
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"I think that if we don't step up our game and push for more political involvement, we're going to lose talent," Todd said.
Startups are firms younger than 10 years old, built on innovative or high-tech business models and aimed at high growth, according to the German Startup Monitor, an annual report on the sector by the Federal Association of Startups. In 2016, more than 3,000 startups across Germany employed roughly 14,500 employees, according to the Monitor. Investment during the year totaled 1.1 billion euros (then about $1.2 billion).
Berlin is the sector's hub in Germany, with accelerated growth in the past few years. Major domestic and international firms like Google, Siemens and Samsung have all opened startup accelerators - platforms aimed at funding startup ideas - in the city in recent months. Success stories are visible across Germany, however, and include Bonn-based Deutsche Post DHL, which purchased electric vehicle manufacturer StreetScooter in 2014 for its own mail delivery fleet - and is now selling the vehicles worldwide.
German startups sound the alarm
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Getting around the paperwork
The dynamism that drives startups can run headlong into Germany bureaucracy, panelists said. Multiple state and federal agencies require registration and paperwork at the outset; communication is often done by paper and post; and most forms remain in German, despite an industry in which 30 percent of the employees come from abroad. Starting a business can turn into a hassle, startup advocates say; closing one down is a nightmare.
Maren Jasper-Winter, a member of Berlin's parliament from the business-friendly Free Democratic Party, said entrepreneurs should be excused from paperwork such as registration for the first year of their business.
"Business is fast, and if it's lasting a very long time, maybe you leave Berlin and go elsewhere," she said.
Standout German startups @SXSW
Dozens of German startups have tried to make a name for themselves in Texas at South by Southwest (SXSW), an annual conference combining tech, film and music. Here are seven of the most promising participants.
Empowering horse enthusiasts
Hanover-based sports tech startup Horse Analytics wants to take the multi-billion dollar but largely analog equestrian sport to the digital age. The company has developed a tracker that lets horse owners monitor and optimize exercise, sleep and behavior of their equids around the clock. In the photo, founder Enri Strobel is pitching in the SXSW Accelerator competition.
Image: Benjamin Bathke
Selective sounds from Berlin
With its 3D audio technology, HOLOPLOT wants to create virtual acoustic spaces and immersive audio solutions by determining where sound can be heard - and where not. The team has already tested its patented technology at train stations and airports. At South by Southwest, HOLOPLOT won an Interactive Innovation Award in the music and audio innovation category.
Image: Benjamin Bathke
The world's largest 3D printer
Tech startup BigRep's 3D printers translate digital designs into prototypes and new products, both for studio and industrial use. According to Amir Fattal, BigRep's director of creative projects, the "BigRep One" is currently the largest serial 3D printer in the world. Founded in 2014, BigRep currently employs 60 people from 12 nations in its Berlin, New York and Singapore offices.
Image: Benjamin Bathke
NÜWIEL wants to free cities of cars
Nüwiel sells electric-run bicycle trailers to alleviate inner-city traffic and assist in transporting food. According to co-founder Natalia Tomiyama, the trailers provide push assistance when cycling uphill and are capable of transporting loads of up to 120 kg. The Nüwiel team has won several contests and scholarships for founders including EXIST, InnoRampUp and the Climate-KIC program.
Image: NÜWIEL
Making a virtual splash in Austin
More than a quarter million users have signed up for the Splash app since virtual reality startup Viorama won the SXSW Accelerator competition last March. Splash lets users color their environment and stitch it together live, thereby filming 360-degree video they can upload to YouTube and Facebook. Founder Michael Ronen said his team was currently working on a "mixed reality offering."
Image: Dan Taylor photography
First aid container for refugees
The Refugee First Response Center (RFRC) is a container equipped as a medical emergency station. During the refugee crisis in 2015, 10 of these containers were installed in Hamburg. RFRC co-creator Harald Neidhardt wants to install 100 more container clinics at hotspot locations in the near future. In Austin, Neidhardt moderated a panel titled "Tech for Good: Solutions for the Refugee Crisis."
Image: Harald Neidhardt
Helping machines see with ultrasound
Munich-based Toposens has developed a 3D sensor that perceives its surroundings via ultrasound. According to the founders, the sensor is not only the first of its kind, it's also able to recognize objects within a range of up to eight meters with millimeter accuracy and position those objects in a 3D model. In the photo, founder Tobias Bahnemann is pitching his startup at German Haus.
Image: Dan Taylor photography
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Or is the burden of bureaucracy overblown? Uwe Horstmann, a founding partner of venture capital firm Project A Ventures, which oversees 260 million euros in investment capital aimed at high-tech firms, argues that an entrepreneur with a strong idea isn't likely to be dissuaded by paperwork. Startups are better off pushing for more selective help from the government, such as support for more established startups, he argued.
"The good people will probably start their companies anyway," Horstmann said. "So we should really think about how can we help the very few really good companies grow fast as opposed to trying to turn everyone into an entrepreneur."
An election focused on stability
German leaders have gradually turned toward the issue of digitalization and the need to prepare an economy built heavily on manufacturing for a future of automation. Federal support for research into automation and the changes it will bring to the German labor force are part of the government's "Industry 4.0" project. A planned 100-billion-euro broadband network expansion will boost internet speeds across the country. And a minister of digitalization could be named in the next government.
Startup companies move into bank territory
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Yet digitalization has been a small part of an election focused more on stability than change. The topic barely came up during the recent debate between leading candidates Chancellor Angela Merkel, a Christian Democrat, and Social Democrat Martin Schulz, panelists noted. An emphasis on digital education remains rare in schools. Many family-owned manufacturers still look skeptically toward the startup sector, meanwhile.
"It's very, very clear to see that digitalization still has not really arrived as the central driver and change-point for our society," said Geraldine de Bastion, a political consultant who specializes in the topic.
The startup sector's political goals will therefore depend on how Germany's political and cultural attitudes toward digitalization evolve, the panel concluded. Can an established German economy force itself to change ahead of the future? Will parents, politicians and teachers recognize the importance of digital education? And can data privacy concerns and walls between data sharing be balanced with growing machine learning in industry?
Perhaps most importantly, can Germany stomach the disruption caused by growing digitalization and automation?
"This is the biggest thing for Germany," Bastion said. "I think there's hardly a country around the world that's going to be as psychologically affected by this as we are, where labor and income is detached from one another in the future, basically."
