More digitalization, more money for founders, more entrepreneurial courage: The new chairwoman of the startup association, Verena Pausder, wants to advance Germany as a start-up location and prevent growth companies from leaving. “We can no longer allow successful founders to rely on money from abroad for large financing rounds and some to go to the USA to go public,” Pausder told the German Press Agency. “This is a loss for our economy.”
The local start-up industry has grown significantly in recent years, but is underestimated. The industry employs around 400,000 people and, with a company valuation of 172 billion euros, represents around five percent of economic output, said Pausder. “In 2018 it was less than one percent. It’s not “very nice” that a company is being founded here – it has economic weight and is a driver of innovation.”
During the Corona pandemic, the German start-up industry benefited from a boost in digitalization and low interest rates at the time. Delivery services like Gorillas and financial firms like broker Trade Republic boomed. The number of start-ups valued at billions has increased almost fivefold to 33 since 2018, including the online bank N26, the translation service DeepL and the long-distance bus operator Flix.
More venture capital needed for founders
But Germany is lagging behind when it comes to the venture capital that investors use to invest in start-ups. Many of the companies raise money in the early growth phase, but for large financing rounds they usually rely on Anglo-Saxon investors. Investors such as insurance companies in this country shy away from venture capital and are hardly allowed to invest in this area due to strict investment regulations. Successful companies often go to the USA to go public, an example of this is the corona vaccine manufacturer Biontech.
The investment regulations for professional investors need to be relaxed, demanded Pausder. “We don’t trust the venture capital asset class in Germany.” In this country, 85 euros per capita are invested in venture capital, in France it is 107 euros and in Great Britain 171 euros. In addition, the lack of digitalization in the administration makes setting up a company more difficult. “This is where we have the most to do,” complained the 44-year-old. “I’m not asking for state money, the state must develop a stronger self-interest in founding companies, going public and creating jobs.”
“We need to talk more about success.”
A “culture of courage” is also needed in Germany, said Pausder. “The negativity of how we look at this country, how everything is supposedly going down the drain, bothers me. Who is motivated by that? Who should start a business here?” We need to talk more about successes, “about the Kenyan software developer who works here, instead of about the people we don’t want here.” Start-ups and the entire economy need foreign skilled workers. “A fifth of the employees of Berlin start-ups come from outside Europe.”
Pausder, who was elected to the top of the association on Tuesday, has made a name for herself as an entrepreneur and founder. She is also involved in sports: In 2022, Pausder and five co-founders took over the women’s team at FC Viktoria Berlin. During the pandemic, she campaigned for more digitalization in schools. Most recently she fought against lower income limits for receiving parental allowance.
