The success story of the German start-up scene
Start-ups? These are young companies with idealistic concepts. In the beginning, the German start-up scene was smiled at by many. But since its hesitant beginnings, the German start-up scene has developed into an international model of success. In the third part of our series, we provide a historical overview.
The success story of the German start-up scene should have surprised even optimists. Because in the beginning, Germany was anything but a paradise for start-ups.
Founder spirit was a foreign word
On the contrary! The beginnings of the German start-up scene go back to the mid-1990s. At that time, however, entrepreneurial spirit was still almost a foreign word in Germany. Young people did not want to start their own companies, they were looking for secure jobs in established companies. But then there were two developments that turned this upside down: The McKinsey consulting agency's business plan competitions and Deutsche Telekom's IPO. McKinsey brought the first business plan competition to Germany in 1995. The aim was to encourage young graduates to set up companies and thus establish a start-up culture in Germany.
Although the beginnings were very hesitant, this was the first time that the public had noticed the topic of "start-ups" and the competitions motivated many young founders to start a company. The large start-up centres at that time were Hamburg and Munich due to their proximity to technical universities and established technology companies.
While this created a timid start-up scene in the first major German cities, Deutsche Telekom went public and launched a stock market trend in Germany. New technology start-ups emerged almost overnight with the primary goal of growing rapidly, going public quickly and disappearing quickly with profits. However, it became apparent just as quickly that this was not a particularly sustainable strategy. In 2001, the stock market bubble burst, many start-ups went bankrupt and the young German start-up scene also fell into a crisis - until the Samwer brothers started the start-up company "Rocket Internet" in Berlin.
A new company every 20 minutes
Rocket Internet brought together established companies, creative minds, investors and young founders in Berlin and thus formed the basis for the German start-up scene 2.0. The German founders had learnt from the mistakes of the past and now, in addition to creative ideas, also focused on sustainable business models and long-term growth. The stability of this new ecosystem was demonstrated during the financial crisis of 2007. Here, too, not all start-ups survived, but the scene survived the crisis largely without damage. Since then, Berlin has been regarded as one of the most popular start-up locations in Europe. A new company is founded here every 20 minutes.
Between 2008 and 2018, 28 unicorns were created in Germany. The most successful German start-ups include the Fintech start-up N26, luggage manufacturer Horizn, the Auto1 Group and now internationally established companies such as Flixbus and Flixmobility, Zalando and Trivago. They have all shown that they can build successful business models with fresh ideas and sustainable concepts.
It is precisely this combination of the courage to innovate and a sustainable business model that makes German start-ups internationally successful. Berlin operates on an equal footing with other founding cities such as London or Barcelona. But the really exciting thing about the German start-up scene is that it is not just a capital city phenomenon. Rather, the Berlin scene has inspired the rest of the country. A glance at the investment inquiries confirms this: Most inquiries come from start-ups in the province. This also shows that start-up culture is more than just a short-lived hype. It has had a lasting effect on the working world in Germany.
The next step: start-ups and companies cooperate
Start-ups in Germany are now regarded as centres for research, development and innovation. The scene has also changed the working culture in the country. Young companies are no longer afraid of breaking new ground and questioning old concepts. They live an agile corporate culture, introduce mobile work concepts and experiment with new technologies.
At the same time, start-ups and established companies have realized that they can learn a lot from each other. Companies benefit from the agility and innovation of start-ups. Start-ups in turn learn how to build successful companies over the long term. Inspired by this, many new cooperations have emerged between traditional corporations and start-ups, such as accelerator programs, incubators or joint hubs.
The Retailtech Hub shows the advantages of cooperation between companies and start-ups. The Munich hub sees itself as an innovation platform for future-oriented companies and start-ups and was launched in 2017 by MediaMarktSaturn and the accelerator experts at Plug and Play Tech Center. Today, other major retailers and retail-related companies such as Lidl, Kaufland, s.Oliver Group and Wirecard are working on it. With the aim of driving the digital transformation process forward, MediaMarktSaturn is engaged in an intensive exchange with international (tech) start-ups and other companies in the retail sector. Numerous pilot projects have already been implemented with the startups from the Retailtech hub.
Here you can see part 01 of our series "Looking outside the box": How successful are intelligent language assistants?
Here you can see part 02 of our series "Looking outside the box": What is Big Data and how do we benefit from it?