Startup Hubs: Munich, Germany
A study by Investitionsbank Berlin brings to light the surprising fact that Munich may be the tech startup hub of Germany instead of the more obvious Berlin. Though many disagree with this finding, it still makes Munich a city of interest as a startup hub.
In our continuing investigation of startup hubs around the world, we will take a look at 1) the location, 2) the tax incentives, 3) legal incentives, 4) investors, 5) local resources 6) specialization of the area and 7) startups to watch in Munich.
Munich is the third largest city in Germany. It is preceded by Berlin and Hamburg. The city with a population of close to 1.5 million is the capital and largest city of the German state of Bavaria. It is located north of the Bavarian Alps along the bank of the River Isar. The extended Munich Metropolitan area has a population of nearly 5.8 million people.
The city boasts a number of major universities as well as museums and theatres. It is also home to many architectural attractions and has played host to international sporting events, exhibitions and conferences. Another major attraction in the tourism sphere is Oktoberfest which attracts tourists from all over the world.
The city is well connected nationally and internationally in terms of transport through a fast and reliable transport system. The city is one of the fastest growing in Germany and is a center for finance, publishing and advanced technologies. The city is popular with migrants and expatriates with a Mercer Livability ranking of number 4 in 2011 and 2012. It was also ranked number 15 all over the world for economic and social innovation. This assessment was out of 289 countries in 2010. The ranking was assigned in 2013 by 2thinknow Innovation Cities Index after an assessment on as many as 162 indicators.
Advantages to Choosing Munich for your Startup
In 2014, the top technology hubs in Europe were ranked by strengths in development, networking and business among other categories in a report “Mapping the European ICT Poles of Excellence.” This report was released by the European Commission’s Joint Research Center. Through an assessment of different factors, the report puts Munich above the rest of Europe’s tech hubs.
Elena, a blogger with experience in Silicon Valley, feels that the reason Munich is not widely mentioned among top tech cities in Europe as often as it should is because the relevant events in the city are very specialized and German focused. However, there is a lot of potential for business and relevance to these events. She mentions a few of these, though some may come as a surprise!
An unlikely contender in this list, the festival often serves as a key networking event for tech companies. Business development is the aim with clients entertained to secure their business and loyalty. Companies will pay a lot of money to ensure great tables for their clients. This helps entertain important contacts as well as to seal deals.
This event takes place every year in June and is an important date in the tech and digital environment of the city. It has been around since 2012 and has grown in popularity with each year. During the 7 day event, companies, professionals and tech bloggers come together for a series of networking and training events as well as presentations and other activities. The goal is to support the tech ecosystem in Munich and build strong relationships within the community.
Most of the conferences are German focused and cater to a niche, but they remain extremely relevant. Some of these conferences include the wearable technologies conference, Sicherheit Expo (the world’s largest security event with a large section on IT security), MedienTage (focused on the media industry including the digital side), DLD (about digitalization), TDWI (Data Warehouse conference), WebTech (web design, HTML, Java etc), a key Java training event Java EE Summit, LOCA conference (Location Technologies), OOP (where software meets business) and Cloud Computing and Virtualization.
Overall, Germany has a competitive taxation system for companies with the average tax burden on companies standing at only 30 percent. In some regions, this is even lower because of locally variable rate of trade tax. The specifics of tax incentives will obviously vary according to the type of business being set up and the exact location. A local tax professional will be able to help decode the German tax for a startup and allow the entrepreneur to make the best use of available tax incentives.
The government is also working to encourage the growth of small businesses and entrepreneurs. In 2015, the Economic Minister pushed for expanded tax breaks for startups and helping them with an easier path to the stock market. There was an announcement by the minister earlier in the year to help encourage private-equity funds to invest in German startups.
It is relatively easy for an entrepreneur to establish a business in Germany. There are very few restrictions to starting a business and there is not much distinction between German nationals and foreigners when it comes to business. In addition, there is no restriction on the repatriation of profits. This provides a vast and fairly level playing field for the ambitious entrepreneurs. Non-EU nationals will require a work visa or permit.
A local lawyer can help decide the best way to set up a business, with options including limited liability companies, joint stock companies and different types of partnerships. A lawyer can also help navigate local hurdles, regulation and bureaucracy. Expats may need to prove that hiring non-Germans is a necessity and that no jobs are being taken away from Germans.
There are a number of investors around Germany who are willing to invest in the right startups. These investors are on the lookout for companies with great ideas, ambition and talent. One of those venture capitalists is Wellington Partners.
Two big German startup investors are based in Munich. These investors, Hubert Burda Media and Holtzbrinck, are spinoffs of publishing firms and fund both local and foreign entrepreneurs.
The European Commission’s ICT Poles of Excellence Atlas monitors and ranks 34 areas of high energy across Europe. According to this commission, Munich is the strongest area in Europe for startups considering all aspects. The exceptional scores that led to this placement were in R&D and Innovation.
The area’s long history of excellence in automotive technology makes it an obvious contender for this position in ICT. The area needs further strengthening in the area of business and needs further development as a tech hub.
The city has a number of local resources in its startup ecosystem that can help an entrepreneur get the right support and direction. These include:
- Unternehmer TUM: This is the Center for Innovation and Business Creation at the technical university and is home to a number of startups. It is also home to the Techfounders Accelerator Program, the initiative TechTalents and MakerSpace.
- ImpactHUB Munich: This organization offers desks and office space for a team depending on the needs of the startup. The space is designed neatly and organized to help creative minds find each other and work together.
- Werk1: This is an incubator and a coworking space that accommodates an eclectic mix of startups. The space also plays host for many events.
- TechFounders: This organization runs a 3-month accelerator program for tech startups. The company takes no equity and offers both a Euro 25,000 in cash and access to a huge network of partnerships with top companies.
- Wayra: This is Telefonica’s accelerator with an important presence in Munich. The office space is modern and sleek, located in the heart of the city and often used as a space to host relevant events. The accelerator focuses on digital entrepreneurship.
- Bavaria Israel Partnership Accelerator: A recent entrant into the Munich accelerator scene and the startup ecosystem, this program helps facilitate cooperation and exchange between startups and entrepreneurs in Munich and their Israeli counterparts.
A great way to get insight into the workings of any ecosystem is to have a conversation with those who are successfully navigating it themselves. Some Munich based entrepreneurs include:
- Felix Haas: Haas is the founder of Amiando, which was sold to Xing, a LinkedIn Competitor. He has been suppoting the development of an entrepreneurial network since the very beginning and has started many new ventures while remaining active as an angel investor.
- Jakob Assmann: Jakob is social entrepreneur and cofounder of Polarstern. The company is renewable energy provider with a 100 percent green energy. It also helps its customers bring green energy to third world countries.
- Sabrina Niederle: As executive director of Manage&More, an entrepreneurial education program for students, Niederle has helped groom many young people for a future in startups. She remains committed to this development and support of new talent and student entrepreneurs.
Events & Meetup Spaces
Some events and meetups can help entrepreneurs learn from each other’s experiences. These include:
- Bits&Pretzels: This three day founder’s festival takes place during Oktoberfest and is a great place to meet world famous entrepreneurs out of their normal milieu.
- Hack@Night: This is a monthly event which brings together hackers, techies, students and entrepreneurs and gives them a chances to work on a current project and see what others are doing. There’s free food!
- Inspire and Dine: Another monthly event, Inspire and Dine invites a few influential speakers to come and speak to an audience about their own experiences and learning.
- FuckUp Nights Munich: This is an interesting event where speakers come and share their experiences and lessons from unsuccessful entrepreneurship endeavors.
STARTUPS TO WATCH
There are many startups in Munich that can be interesting to watch and learn from.
- Bragi: This is an in-ear wearable device that allows for wireless listening of music. It also tracks performance and analyzes vital stats. “The Dash” is a piece of impressive technology with a beautifyl design.
- Braufässchen: This company placed second at the nation-wide German founder competition and the word means a brew barrel. The product lets you brew your own beer and create a taste to your own liking.
- Freeletics: This is a popular fitness application that provides challenging workouts without any equipment.
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