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Germany: A Future Haven for Startups?

Germany seems to be lagging behind on the international startup scene. But are its fortunes set to change? And if so, who would be behind its transformation? This was the topic of discussion for politicians, young entrepreneurs, and investors at SCALE11's Startup Meetup Panel.

23 Mar. 2017

Rules and Regulations Come under Fire

When FDP leader Christian Lindner tore into German bureaucracy, he struck a chord with the public – especially with young companies "who had long since grown accustomed to the issue." Well-meaning regulations like the Arbeitsgesetz (Hours of Work Act) represent an obstacle to many startups, putting them at a disadvantage compared to competitors in other countries.

Tim Gude, Head of IT Solutions at Volkswagen, took a similar line. "Working alongside small companies is a big issue for us. There are legal pitfalls everywhere." An example is the "quasi-self-employed" status a freelancer takes on when working on a larger project. Matthias Hunecke, founder of Brille 24, is tired of constant policy amendments. He calls for consistency. "It'd be great if I didn’t have to take into account new changes in the law every single year just so I don’t incur tax penalties."

Members of the panel also condemned the German government's apparent fondness for red tape: "It's a travesty that someone shouldn't be able to establish a business in Germany simply because the regulations are too tight. They'll set the company up anyway – just somewhere else," laments Florian Nöll, Chair of the German Startups Association.

No Shortage of Potential Solutions

So what's the answer? "Make it easier to acquire funding," says Lars Klingbeil of the SPD (German Social Democratic Party). "Improve IT infrastructure through broadband expansion," advises Hunecke. "Galvanize the Antitrust Division and reduce the dominance of organizations such as Amazon," implores Lindner. All three were in agreement on one thing in particular: rethinking the education system. "In Germany you can gain an IT degree without even being able to program," says Lindner. "Higher education in the US is more practical, whereas here we’re far too theoretical." For SDP member Lars Klingbeil, that simply won’t do. He believes schools should be encouraging children to develop an entrepreneurial spirit – because for him, it's a matter of culture and attitude. This explains why Germany has so few startups compared to other countries. Lindner also bemoans the country's hesitance and negativity: "Digitization is a prime example; we’re wasting time complaining about the possible loss of jobs when we should be focusing on the opportunities!"

VW’s Gude sees another problem: "We're lacking creativity – and that's what entrepreneurship is all about." But there's a more positive message to take home from this; Gude adds that there is still plenty of potential – especially at high schools with their interdisciplinary approach. "A successful app requires expert input from a variety of disciplines – not just coding. This is a chance we need to make the most of."

Get to know promising startups and engage in conversation with investors and inspiring entrepreneurs – at SCALE11 in Hall 11.