Spin-offs and start-ups

Spin-offs and start-ups

The quality of the German start-up scene has been improving in recent years: today’s entrepreneurs are more idea-driven, growth-oriented and innovative. And there is good news if you are thinking about starting your own business: the environment for start-ups is also a lot better now.

Facts and figures

  • 557,000 entrepreneurs, 14% with innovative and 26% with digital business ideas
  • Almost one third of all start-ups are involved in information and communication technology
  • Roughly 10% of start-up founders come from outside Germany
  • 1.5 billion euros in venture capital was raised by innovative start-ups in 2018

Innovative start-ups

Germany’s start-up scene is in a state of flux: a new generation of business founders is emerging who have many things in common – they pursue research and development as a matter of course, use digital technologies and launch businesses that they want to see expand in the future. These young start-ups develop technologies for medical product innovations, new forms of mobility or applied artificial intelligence.

One such young and innovative company is the multi-award-winning start-up ArtiMinds Robotics. ArtiMinds has developed software that allows industrial robots to be programmed quickly and intuitively: the robot copies human movements and learns how to react flexibly to problems. It can then reliably solve even complex tasks.

An idea that is as brilliant as it is convincing, this has been a real success story. A 2013 spin-off from the Karlsruhe Institute of Technology (KIT) has evolved into a technology company employing over 60 people and supplying the world market from its Karlsruhe base.

In the video, Dr. Sven Schmidt-Rohr, CEO ArtiMinds Robotics, explains how a good idea was transformed into a successful company.

Scientific spin-offs

Many spin-offs arise out of projects in universities or research institutes. This was also the case at ArtiMinds Robotics: all three of the young founders of ArtiMinds were research associates at KIT. Known as the “research university in the Helmholtz Association”, it is ideally positioned to help high-tech spin-offs get off the ground.

In 2017 alone, this institution of top research and scientific excellence registered 124 inventions and 55 patents, and enabled 29 spin-offs. Like KIT, other non-university research institutions such as Fraunhofer and the Max Planck Society, not to mention universities and higher education institutions, are also involved in the transfer of scientific projects to business product development.

Business spin-offs

Existing companies also generate spin-offs from innovative projects or create internal startups. The technology giant Bosch, for instance, funds young businesses all over the world with a start-up platform and invests millions in internal and external start-ups.

Or Daimler, which specifically targets innovative start-ups: together with the University of Stuttgart and other partners, the company explores opportunities for cooperating with hard-tech start-ups through its “Startup Autobahn” programme.

Funding for start-ups

Of course, not all start-ups receive initial help from universities or companies. All the same, they can expect some support: besides the numerous awards and start-up prizes, substantial financial support is also available from public-sector funds, as is long-term coaching. There is indeed very good public support for start-ups. As experts attest, “in an international comparison, there is no country with a significantly higher performance than Germany”. This is the conclusion drawn in the annual Start-up Monitor published by the KfW Group.

For example, High-Tech Gründerfonds (HTGF), Germany’s biggest investor when it comes to early-phase financing of innovative and technology-oriented companies, provides support right from the start. Funding comes mainly from the Federal Government, followed by KfW Group. Private investors from small, medium-sized and large companies also contribute to the fund. The HTGF helps not only by providing early-stage funding but also actively supports you in getting your new business off the ground.

If you are launching a scientific spin-off, the publicly-funded EXIST programme may be of interest. The programme, which also helped ArtiMinds to get started, supports researchers and students in preparing and implementing their research-based start-ups, accompanying them from the business plan stage right up to the actual launch. This is done by providing grants or paying for personnel and equipment, by funding development work and covering start-up costs, and by offering coaching and seminars.

Another option is to engage a business angel: these private investors contribute not only their capital to a young company – they also make their expertise, market knowledge and networks available. Normally they are involved only in the initial phase of a company and tend to invest for just a limited period. To find your angel, get in touch with a business angel association, many of which also belong to the Business Angels Netzwerk Deutschland. Or attend a matching event or one of the numerous other events aimed at entrepreneurs.

Venture capital

Generally speaking, the environment for start-ups and spin-offs has improved in recent years, and there has also been progress when it comes to investment: besides the considerable public-sector financing that is available, private investors are increasingly providing venture capital.

That is a good thing, because, according to Deutsche Startup Monitor, over half of all start-ups are dependent on external capital. A total of 1.5 billion euros was raised by these roughly 1,500 young, innovative and growth-oriented enterprises in 2018.

This venture capital especially benefited not only providers of financial services, but also enterprises working in the mobility, blockchain and AI sectors.

Springboard innovation

These are also the fields of research that interest Germany’s new Agency for the Promotion of Springboard Innovation: the idea is to support breakthroughs in artificial intelligence applications, new forms of mobility or medical technology innovations.

During an initial phase lasting until 2022, the new agency, which was founded at the end of 2019, will have more than 150 million euros at its disposal. Another billion euros is expected to be made available for the first ten years. This money is intended to help researchers and inventors turn their groundbreaking ideas into reality.

How to become an entrepreneur

Are you thinking about founding your own business? Here is an initial checklist:

  • What can I contribute?
    Strengths, experience, money, contacts
  • Do I have a viable business idea?
    Who will my customers be? What is the market like? How big is the risk?
  • What support is available?
    Information, funding, networks, contacts
  • Now it’s time to begin planning!
    Write a business plan, clarify insurance issues, plan a retirement pension
  • Now it’s time to think about money!
    Calculate your capital requirements, talk to your bank, apply for funding, apply for a tax number, clarify your status with your local tax office
  • Now it’s time to get started!
    Register your business, contact your local chamber of commerce, prepare your marketing strategy and activate your networks
  • Keep your nerve!
    Be realistic. Not everything will run smoothly at first. Get the help and advice you need, and never lose your passion

Business start-up portal

Existenzgründer_640x360

Information, checklists and practical help can be found on the "Existenzgründer" website.

www.existenzgruender.de