Frog Blog

Germany’s entrepreneurial ecosystem reaches adolescence

By Jens Düing

Germany has recently seen a proliferation of accelerators: first came those founded by successful entrepreneurs (e.g. Rocket Internet, Project A, Hanse Ventures), then more recently the corporate ones (e.g. Hub:raum, P7S1 Accelerator, You Is Now). With so much support, aspiring German entrepreneurs have the best chance ever to grow their companies into sustainable businesses. The market traction of the first wave of these companies has now become clearer. Inevitably, the evolution of this ecosystem means that some start-ups will fail (see recent article in German business weekly WirtschafsWoche). The recent, passionate discussion (German language link) about such failures demonstrates the growing pains of this ecosystem. Just as much as failures are part of the adolescence of the entrepreneurial ecosystem in Germany, so is another challenge: successful companies that outgrow the start-up phase need further capital and expertise to fuel their continued growth into international leaders. A recent study by EY shows this is proving to be a real challenge. They report that finding further funding ranks at or near the top of the vast majority of entrepreneurs’ lists of concerns (EY’s Start-up-Barometer Deutschland April 2014). Jobsgates edit   With more companies outgrowing the accelerator / start-up phase, attracting sufficient and smart capital will be increasingly important for successful entrepreneurs. This growth capital should bring with it international networks and insights to help these exciting German companies become global market-leaders. The challenge then becomes connecting these quickly growing companies with the most suitable investors. While these successful entrepreneurs might enjoy a high level of prominence in their local scene, this is not necessarily the case beyond. An increased presence in the major global finance hubs will go some way and events like London’s NOAH conference are proving to be very fruitful gatherings. Meeting German entrepreneurs in these hubs is becoming an increasingly common sight, but how about the German efforts of the leading growth capital providers? The nascence of the German ecosystem means that it still flies under the radar of many of these investors. The ecosystem is simply too young to have produced a flow of eye-catching exits, as Earlybird’s Ciarán O’Leary succinctly analysed in his recent Techcrunch article. I often find myself as the only foreign based investor at entrepreneurial events in Berlin, Hamburg or Munich. I would certainly encourage more foreign based investors to increase their presence in the German market – you will find some great entrepreneurs to back!

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