Germany’s VC industry is ready to take off, but bureaucrats need to release the handbrake – TechCrunch

The story suggests that Germany lags behind its European neighbors Building a globally competitive venture capital market.. But the next five years will be big for Germany’s venture capital sector, and I think the future signs are very bright.

German start-ups raised € 6.4 billion in 2020. This is more than France, which came in at € 5.7 billion. Another advantage is a healthy blend of domestic and international investment in the early stages of the market. German funds dominate investment in German startups. Seed and Series A stage.. Foreign investment plays a major role as a company grows — Half of the transactions over the $ 50 million funding round are entirely led by foreign investors, Only 5% are run by German investors, and 45% see a mix of foreign and domestic investors at the cap table.

I think this is where the German VC market is needed now. Great innovation is funded and supported by local funding. As these companies grow and become winners, they will attract the best investors from all over the world and allow them to internationalize from their German locations. Early-stage VCs earn rewards and continue to invest in local German talent. We are confident that more German venture capital will be invested in the growth phase as the market matures.

And the outlook is good. The German market is thriving. Even the pandemic had little effect on this fundamentally positive trend in the technology sector.

The German market is thriving. Even the pandemic had little effect on this fundamentally positive trend in the technology sector.

In addition to rising levels of domestic and international investment in German technology, policy makers have created better conditions for startups and VC funds to thrive in Germany.

German federal government inaugurated 10 billion euro future fund And we invested additional money in the Deep Tech Future Fund. This not only immediately injects more capital into the market during the growth phase, but also shows that Germany is “open to business”. It sends a clear signal to the world that Germany understands the link between innovation and concrete improvements in society. This is a powerful and welcome indicator of funding from around the world.

Germany is very attractive not only to investors but also to engineers.More and more technicians Moved to Germany, The welfare state provides a model for the future.

It looks good in the long run. Germany is world-renowned in the manufacturing and engineering sector. Germany is one of the few countries that still produces a trade surplus through domestic production. Manufacturing and engineering have not yet experienced a major leap in innovation. Therefore, German start-ups are in a great position to benefit from the increased activity of “Industry 4.0” innovation, and talent from the German manufacturing center continues to grow in Berlin and Munich. We are poised to integrate with the pool of human resources.

Sharing options and spin-offs are the Achilles heel of the German startup scene

I think the German VC and tech markets will take off and reach new heights. However, there are two areas that need to be significantly improved. It is a regulation on employee stock options and spin-offs.

Germany is suffocating bureaucracy, which threatens innovation.Tesla’s new Gigafactory is the latest example How a bureaucratic process can slow everything down.

For German start-ups, employee stock ownership plan (ESOP) reforms are urgently needed for them to benefit from their success and for their ecosystem to grow on their own.

The· Current invoice Providing better tax incentives does not reflect the needs of the industry. For example, tax exemption is only available to employees of companies under the age of 10. If an employee changes employer, he or she must pay taxes on the company’s stock in advance, which poses a significant risk of bankruptcy. Many start-ups haven’t made a profit after 10 years, so you only have to pay taxes when your employees actually make a profit from their shares, that is, when they sell their shares. After all, startups just don’t offer new ESOPs to their employees.

Another example: spin-off.In Germany Most patent applications in Europe.. However, start-ups are often unable to adapt innovative technologies to the product market. Spin-offs from major German research institutes struggled to gain a foothold due to the high fixed and licensing costs of the institutions at the time of the spin-off. Here, Germany needs to be more flexible and provide the space and funding needed for startups.

Reduce fixed costs and face the founders of huge bureaucracy during spin-offs. Investors need to provide more operational and organizational support to those who have turned from researchers to founders. In addition, VCs need to have the courage to invest more in innovative ideas and technologies that can take some time to succeed. BioNTech is the best example of how this will pay off in the long run.

More German unicorns?

As it stands, many new unicorns have already been seen from Germany in 2021. Personio, Mambu, Sender, gorilla And Trade Republic Achieving a multi-billion dollar valuation — and almost certainly more.

Germany’s technology and VC industry will reach new heights if regulators eventually break through bureaucratic formalism around stock options and spin-offs. We look forward to positive changes and the entire German unicorn roster being cast in the coming years.

Germany’s VC industry is ready to take off, but bureaucrats need to release the handbrake – TechCrunch Source link Germany’s VC industry is ready to take off, but bureaucrats need to release the handbrake – TechCrunch

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