BDO LLP | INTERNATIONAL TECH HUBS SECOND EDITION
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17 INTERNATIONAL TECH HUBS SECOND EDITION | BDO LLP
GERMANY
cybersecurity firms; Nuremberg and Erlangen attract healthtech companies; and Stuttgart is the base for future industries. Munich concentrates on mobility and InsureTech as well as Deep-Tech; Karlsruhe is the home of artificial intelligence; and Mannheim and Ludwigshafen centre on digital chemistry and HealthTech. There are over 90 more clusters around the country, supported by states or cities, creating a strong network of collaborative tech hubs across the nation, many of them now well-recognised globally: Germany’s start-up and tech ecosystem is on the rise. Berlin is now the second largest start-up hub in Europe, followed by Munich. Despite the impact of COVID-19, there is plenty of opportunity in Germany. German companies are competitive in the global tech scene, with the area providing an excellent backdrop for corporate growth. THE GERMAN GOVERNMENT HAS CREATED A NETWORK TO FOSTER INNOVATION IN OF TWELVE DIGITAL HUBS MULTIPLE SECTORS
THE TALENT POOL Germany’s population has seen a downward trend in its younthful demographic since the 1980s. Over 60s are due to increase by almost 40% by 2060, with an overall population decline of 10%. This makes the competition for German talent very fierce. But the high quality of life, the excellent economy, and the prevalence of English all combine to encourage significant inflows of talent into the area. Already 34% of employees are International in larger German start-ups. THE GOVERNMENT SUPPORT German national and state authorities have been working hard over the last 15 years to promote tech innovation and in particular to support the development of ideas generated in universities into marketable products. The idea clusters created through the joint efforts of several specialist university faculties attracts extensive investment, particularly from abroad. There’s a national level of support for these clusters (for example €360 million since 2008; EXIST Business Start-up Grants, and KFW, a national public sector bank has a dedicated fund ‘High-Tech Gründerfonds’ for early stage tech companies), as well as federal initiatives. For example, in North Rhine- Westphalia, a state bank has an investment fund to support MedTech companies working in life sciences and other leading technologies. To offset the COVID-19 impact, the German government introduced a €2bn state aid package to keep struggling start-ups afloat. One aspect that might come as a surprise for international businesses looking to establish themselves in Germany is that there is a higher mix of state funds available in earlier rather than later funding stages, which is less common in other countries.
FOR BUSINESSES LOOKING TO EXPAND OR SET UP, THE COUNTRY’S SECURE LEGAL FRAMEWORK, COMPETITIVE CONDITIONS, AND FIRST-CLASS INFRASTRUCTURE ADD TO THE APPEAL.
With expert input from Jane Evans, Senior Manager of Advisory Services, BDO Germany. Jane has more than 20 years’ experience working in financial services. She has worked extensively with companies in the technology, media and
telecommunications industries with a focus on mergers and acquisitions and financial advisory (debt and equity). Jane is currently joint Head of Sector Centre for Technology, Media and Telecommunications at BDO Germany.
status. With over EUR 100bn invested annually into research and development, Germany sits proudly in fourth place behind the US, China and Japan, cementing its reputation as a haven for innovation. For businesses looking to expand or set up, the country’s secure legal framework, competitive conditions, and first-class infrastructure add to the appeal. With six cities in the top 25 on the Global Mercer Quality of Living Survey, tech talent can enjoy a great lifestyle beyond work too. Perhaps the only challenge is the need for German language skills to access this innovative and impressive market, though English is prevalent. THE TECH BUSINESS ECOSYSTEM Germany is home to leading businesses in many sectors, providing fertile ground for tech innovation. Not just SAP (fourth largest software company in the world) but also companies like BMW, Siemens, Allianz, Bayer and BASF. The German government has created a network of twelve digital hubs to foster innovation in multiple sectors: Harbour City Hamburg is a digital hub for logistics, with Dortmund also focused on this sector. Berlin is centred around IoT & FinTech; Cologne is the hub for InsureTech; Dresden and Leipzig are largely focused on smart systems and smart infrastructure. Frankfurt and Darmstadt mainly attract FinTech and
OVERVIEW: A ROBUST, DYNAMIC AND ATTRACTIVE REGION WITH VC APPEAL Germany’s strong economy and diverse range of multiple technological clusters offers fertile ground for international businesses looking to back innovative ideas. With significant national and regional support for tech focussed start and scale ups, founders can take advantage of a unique network of support including academic and corporate collaboration. THE TECH LANDSCAPE As the fourth largest economy in the world, Germany offers an attractive large pool of 80 million consumers with a peak disposable income. With a well-developed economy and a significant export market – the third largest in the world - this European nation has a lot to offer tech companies looking to either start up or expand. The additional bonus of a highly developed manufacturing sector (its 23.4% gross value added is more than twice that of UK or France) is a testament to the country’s leading economic
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