With the German Startup Monitor 2014 and the Gründungsradar (foundings radar) 2013, two elementary and informative reviews about the German startup scene in general and academic support in particular, have been published in the last few days. It turns out that the subject founding is gaining momentum and the framework is continually improved. New public subsidies are introduced, existing ones developed and expanded – the structures in and around the universities are increasingly shaped professionally. Especially the foundings radar shows that a large number of universities and colleges were able to progress greatly compared to the previous year and are going to take the next steps. Yet, for all rising euphoria and the successes, there are also words of warning and developments to which one should actively and jointly respond. In the following, we outline three examples from the publications and at the same time present our ideas for the solution.
63.3% of the founders estimate the tolerance of society towards failure as (rather) low. (Source: DSM 2014)
That failure in general and failed founders in particular are viewed critically in German society is unfortunately still a big issue. It seems to be a flaw in Germany – the assumption that one does not possess the skills to successfully build and manage a business. Meanwhile, in the USA, falling down (failure) and getting up is not only well received but almost a quality criterion for a successful entrepreneur. With new formats such as the so-called FuckUp Nights, founders are encouraged to talk about their own mistakes and disappointments. At the same time they draw courage from the talks. We are actively working on offering such formats at the KIT in 2015 and to get a positive exchange going.
For the further development of the company, 38% of startup founders see difficult access to venture capital as a “severe” or “very severe” obstacle. (Source: DSM 2014)
The venture capital market in Germany is only slowly gaining steam again. While in recent years the investments of classic VC firms have fallen sharply, this gap was in part filled by other groups such as business angels and family offices. Although international VC companies are now increasingly moving into the German market, it is still difficult, especially for companies in the life sciences sector, to attract sufficient funds in their early stages. Through approaches such as Accelerator and mentoring programs, we at the KIT want to coach especially capital-intensive startups early on and make them fit for an investment. At the same time, we are developing more financing channels, e. g., through crowdfunding approaches and prototype funds.
Incentive systems at German universities still have development potential (Source: Gründungsradar (foundings radar) 2013)
The results of the foundings radars have shown that the number of startups from the university environment continues to rise and more and more people venture into self-employment. However, these are usually only students and graduates while graduate students and employees have less freedom because of their work tasks. Research projects, teaching activities, and ongoing assurance of (own) externally-funded positions often result in little time remaining to develop an exciting technology and a matching business idea into a business model. Again, other countries can serve as an example in which freedom and incentives for employees to think outside of the system and thereby to pursue exciting and personal projects are consciously created. The structure of these incentives is varied and can go from the granting of “founding semesters” on exemptions from teaching assignments and special compensation options to re-employment after a failed founding. At the KIT, we are in constant exchange with universities and research institutes, nationally and internationally, to evaluate new incentive systems and transfer them to our system.
Conclusion: As far as we are concerned, challenges should be the drive to repeat our present successes and to take further steps. We want to further and better help people who dare to do something. The two reports show that overall we are very well positioned in Germany and our experiences lead to the fact that foundings from Germany are met with growing interest internationally.