Learn about the numerous opportunities Bavaria, Frankfurt, and Berlin have to offer for international startups.
Germany has 16 Bundesländer, or Federal States, with Munich, Stuttgart, and Dusseldorf being some of the most known state capital cities. Despite the moderate size of the country, not every region is the same, e.g. in terms of industry focus and domiciled corporates, which are relevant considerations for startups looking to Germany as the next market to enter. The German Startup Monitor 2020 gives us an overview of the startup hotspots in Germany. Of the almost 2,000 startups surveyed, 19.1% are headquartered in North-Rhine Westphalia, followed by 17.7% in Berlin and 12.8% in the Rhine-Ruhr metropolitan region.
Startup headquarters and hotspots by federal state (2018-2019)
Close partnerships with startup enablers across different regions in Germany play a vital role in our mission to help Singapore startups and SMEs land successfully in Germany. We recently held a webinar for our Scaler8 startups to get acquainted with the opportunities and support available for foreign startups in the Bavarian, Frankfurt, and Berlin ecosystems. Read on for some key regional insights!
“Bavaria is mostly known for its strength in car manufacturing, with corporates open to collaborate with startups, e.g. on the future of automotive assembly, but the state is open for innovation in all sectors.” – Andreas Fischer, Senior Manager Investor Services, Invest in Bavaria
- Bavaria is considered the economic powerhouse of Germany, with nearly ¾ of the world’s 50 most innovative companies having a base in Bavaria, especially in the areas of automotive technologies, engineering, life sciences, and robotics.
- Bavaria also has top-class medical-clinical infrastructure that MedTech startups can tap into, comprising two key clusters: Medical Valley and Forum MedTech Pharma.
- Munich is Europe’s leading ICT location, ranking above London and Paris, according to a study done by the European Commission.
- A new Smart City Innovation and Startup Center will open in the heart of Munich in 2021, a joint project between UnternehmerTUM and the City of Munich that will bring together startups and the broader ecosystem to work on Smart City solutions.
- Startups can take advantage of over 50 startup incubators in Bavaria, as well as more than 10 corporate accelerators based in Munich, such as the Volkswagen Data Lab, BMW Startup Garage, and Siemens Next 47.
“A curious fact is that Frankfurt is very diverse. It’s one of those cities in Germany where there are more internationals than Germans themselves.” – Pedro Ferreira, Founder, Frankfurt Valley
- Frankfurt is well-known for its strong fintech ecosystem. As Europe’s financial hub, it is home to the European Central Bank, German Stock Exchange, and Federal Financial Supervisory Authority (BaFin). It is also the European headquarters of more than 80 international banks.
- Logistics and mobility present big opportunities for startups, with Frankfurt boasting Europe’s largest airport in terms of cargo traffic, and the fourth largest in terms of passenger traffic. Logistics and mobility are hence the second biggest opportunity in the region.
- Frankfurt has great potential for IT infrastructure startups. It has the second most data processing centers per capita in Europe, and the location of DE-CIX, one of the world’s largest and fastest internet exchange nodes.
- While the Frankfurt Rhein-Main startup ecosystem is smaller compared to Berlin or Munich, it has a tight-knit and supportive community, with over 500 startups, 40 incubators and accelerators, and an active business angels network.
- It is Germany’s fourth-largest tech community. Don’t underestimate the smaller cities of Wiesbaden, Mainz, Darmstadt, and Offenbach, which are the headquarters of notable corporations and research institutes including BioNTech, Merck, Software AG, and Fraunhofer.
“We chose Berlin for several factors – the international outlook of our company, the quick pace of getting things done, and the thriving startup community which we could tap into.” – Tien Ma, Managing Partner (Germany), REDHILL
- Since the end of the Cold War three decades ago, Berlin has morphed into a young, cosmopolitan city that attracts people from all over the world, with 184,000 newcomers to the city in 2019.
- Berlin is considered the #2 startup city in Europe, with 300+ active VCs, business incubators, and accelerators. Berlin’s startups are particularly strong in the areas of fintech, AI, big data, e-commerce, IoT, and blockchain.
- Tech talent is abundant in Berlin. With 30,000 graduates per year from the city’s 40 universities, Berlin has the highest proportion of highly qualified people under the age of 35 in Germany.
- Berlin is the leading German state in startup growth and investments, with 1 new startup being founded every 20 minutes. 41% of Germany’s startup financing rounds in the first half of 2020 went to startups from the Berlin area.
- Despite Berlin’s status as a major city and startup hub, Berliners take their work-life balance seriously! It is uncommon for workers to stay in the office past 6pm.
Scaler8 is your expert partner for expansion to Germany. Powered by German Entrepreneurship Asia, we position Asian startups and SMEs for success in the German market, through our suite of market exploration and access services, strong networks, and industry expertise.
If you are keen to find out more about how we can support your expansion plans, do get in touch to schedule a 1-on-1 market advisory session for your company.