How Has Germany’s Startup Scene Fared During A Global Pandemic?

Understatement of the century: it’s been a tough year. It’s been a hard year for families, it’s been a hard year for workers and bosses alike — and you bet it’s been a hard year for startups, too. According to the Berlin Startup Monitor 2020, over three quarters of Berlin startups consider themselves “existentially threatened” by the coronavirus crisis.

Possibly the strangest aspect of the crisis is that it hasn’t all been bad: there have been some surprising positives, too. Back in March, the President of the German Startup Association, Christian Miele claimed that the picture was “actually more dramatic than we expected.”

He also argued that “The startup ecosystem is facing a massive death of startups in the face of the coronavirus.” The reality – as found in the results of the German Startup Monitor 2020 – has suggested otherwise. Yes, some sectors have suffered badly, but others have thrived. 

We spoke to experts in the scene to find out about the surprising silver linings, including Travis Todd, the co-founder of Silicon Allee, Jannis Gilde, a researcher from the Bundesverband Deutsche Startups e.V., Liang Wu, the founder of Green City Solutions and Felix Anthonj, the founder of Flexperto. 

Davids outpacing Goliaths

Travis Todd, the co-founder of Silicon Allee

Travis noted that the size of a startup often dictated how much they struggled with the crisis. “A three person company works out of their living room anyway, or a co-working space or something like that. So they can pivot to remote work much quicker whereas I think bigger companies are struggling to figure out how much office space they need and to address what their work from home policy is.” But this isn’t all bad for big companies: “Luckily, bigger companies usually have a bit more runway.”

Different industry, different story

A travel industry protest against coronavirus restrictions in Berlin.

Jannis from the Bundesverband Deutsche Startups e.V. observed how well a startup weathered the pandemic often boiled down to what field they operated in. He wrote that startup sectors such as tourism (92%) or HR (85%) are more frequently hit negatively than, for example, start-ups operating in the education sector (62%) or FinTechs (63%). 

Felix cited his own experience this year in support of this observation. “For us, Flexperto, as one of the leading providers of remote communication software, obviously the year 2020 was marked by a huge increase in new business for us. We were very busy. We more than doubled our revenue within four months after the lockdown in Germany started.”

Innovation, just faster

Travis noted he had observed a lot of innovation in 2020 driven by government policy and that he had found the German government has become faster in creating opportunities and passing legislation related to the crisis — something which drives a lot of new innovative European business models. “Policy-driven innovation has been really interesting this year and it was really cool to see all the hackathons supported by the government which sprung up really quickly, like the #WirvsVirus hackathon. Plus, innovation that arose out of certain laws being in place. We’ve seen a digitalization of the food industry following restaurants being obliged to do contact tracing and digital menus.”

Liang Wu, co-founder and CIO of Green City Solutions © Pascal Rohé

Liang from Green City Solutions explained the pandemic had caused him to adapt his focus very slightly: “In terms of the short-term, the pandemic has definitely harmed us more than it has helped us. As the CityTree creates a clean air experience, we usually rely on live demonstrations to showcase the efficiency and fresh air that is being created by the moss.

But over the mid- and long-term we have managed to adapt our use cases to the current situation. We’re operating much like the moss does: we take what comes and make something beautiful out of it.”

Money, money, money

Travis suggested how strong the financial state support has been in Germany could be one reason why the startup ecosystem here hasn’t been as badly hit as elsewhere. “For the most part, I think Germany compared to other ecosystems I’ve talked to has been quick to react and quick to pay out some of these early grants for freelancers and small businesses so that I think the speed at which they reacted was good.

Everybody’s always going to want more and better but when you compare it to other ecosystems such as the US, it’s definitely been much more supportive here and we’ve also dealt with the entire pandemic better. We’ve been able to open offices faster.”

Want more great insights about the strangest year ever? On January 19th, we’ll be hosting a diverse group of panelists at our next hubraum on air event, ‘From Learnings to New Horizons.’ Follow us on LinkedIn, Twitter or Instagram for more details in January.

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