The Startup Ecosystem of Germany

The German startup scene is characterized by the country’s federal structure, which gives more power and independence to German states and fosters the development of a non-centric startup ecosystem. The diversity of the German startup scene can be seen in some of its notable startups and in its main startup hubs, Berlin and Munich. In Berlin, N26 has been established as a successful fintech startup while TIER is focusing on micromobility. In Munich, the focus is on B2B startups and hardware & IoT. Germany has a tradition of producing global scale, high quality corporations like SAP, Siemens, and Bosch. All these companies are funding initiatives within the German national startup ecosystem as part of their open innovation activities.
Germany’s strength and diversity are also reflected in the quality of seed startup ecosystems. Organizations such as the City of Berlin, the City of Magdeburg, and the City of Kiel are actively involved in developing local startup ecosystems. Moreover, initiatives like ruhrHUB, de:hub, and TechQurier bring together startup ecosystem stakeholders from different hubs in the country and facilitate the exchange of knowledge. The country also enjoys increased international attention on its entrepreneurial scene with events such as Bits & Pretzels.
In terms of funding, the public sector offers a diversified support system for startups. In 2022, the first startup strategy of the federal government was approved and the government pledged to allocate €30 billion to its startup sector through 2030. There are plenty of other incentives, such as EXIST grants for starting a business and easing development costs, High-Tech Gründerfonds (HTGF) for seed investment, and Gründung innovativ to help startups initialize.
German-based entrepreneurs also have the advantage of creating solutions for their local economy, which is much bigger than any other country in Europe, while also leveraging Germany’s EU leadership position to connect with other markets.
However, there is still work to be done in removing red tape and simplifying tax laws that negatively affect the potential growth of German startup ecosystems. While Germany has a skilled workforce, high cost of labor and employee protection laws can be a drawback for startup founders.