Mildew is covering the country: “One should”, “one could”, are the sentiments. But behind that, investors are rearranging themselves, and founders are coming up with new ideas: It’s no longer about souped-up food delivery services, but about what’s new from the universities and is supported by prominent investors in this country: professionals in biotech, robotics, AI.
Something is going on in Germany. We have passed through the valley of tears. There is a mountain ahead of us, but we can get up there. And that may just have something to do with the fact that the national team is suddenly scoring goals again in football. Let’s call this an omen.
Elsewhere, things get very specific: Startups are the seismograph for an economy. When founders dare to start a business, three things obviously come together: ideas that are good, people who can do something, and conditions around them that allow something. That’s why the numbers coming from the Startupdetector data service are encouraging: startups founded in Germany rose by 17 percent in the first quarter of 2024, and the industry is recovering after taking a breath.
Saxony is experiencing particularly strong growth with an increase of 35 percent, which suggests that the highly subsidized chip factories in East Germany are actually helping to create a new network of startups. According to Startupdetector, the creation of AI-related startups has increased significantly, especially after ChatGPT became common knowledge. The federal government continues to support the ecosystem, including a growth fund to strengthen Germany as a location for innovation. It’s modest compared to the generous social benefits in Germany, but still. And no one wants to create an industry that depends on the state. The startups least of all.
In addition, there is a reorganization of investors. Ludwig Ensthaler is the husband of Janna Ensthaler, who in turn is a serial founder, investor and juror in the Lion’s Den. She runs a fund with her husband and he is also a partner in venture capitalist 468 Capital. At a panel discussion on “Business Punk” he got to the heart of it: The days in which venture capitalists invested in marketing and thus hopefully in the growth of pizza delivery chains or food delivery services are over.
The new economy is becoming the old economy again, the hype surrounding purely marketing-driven online startups is changing towards technology. Instead of making quick money by exiting as early as possible, it’s about the long term, sustainability and real added value. It’s about real innovations that help people. New exciting startups are emerging around universities like in Munich and Karlsruhe. It’s about biotech and not latte macchiato, it’s about robotics and not pizza. It’s about the core of what the Germans can do, and not just commonplace ideas.
For example, something like the one currently being created in Heilbronn. Lidl founder Dieter Schwarz’s foundation is building a center for artificial intelligence there. Aleph Alpha, in which Burda also participated, is also there. The hopes in this country rest on this young team when it comes to AI. The state of Baden-Württemberg and the foundation are each investing 50 million euros, although the foundation could later contribute even larger sums. According to foundation boss Reinhold Geilsdörfer, a “small, smart village” will be built on a 23-hectare site on the edge of Heilbronn by 2027: with research laboratories, a data center and space for companies and startups.
It is fitting that there is a yawning emptiness where the investors are no longer there. Turkish startup Getir, once valued at $12 billion, is being forced to rethink its business strategy. The company that sold food delivery as its vision of the future is now considering divesting assets and markets to meet investors’ demands to cut costs.
Consultants are working on a restructuring plan, a merger with competitor Flink has failed, according to information from Tagesspiegel, and the largest lender could soon stop supporting it. According to multiple sources, investor sovereign wealth fund Mubadala Capital from the United Arab Emirates is the driving force behind the negotiations. The Arabs are the main investor in Getir, but also have a stake in Flink. Getir had already taken over the struggling Gorillas delivery service last year.
The bottom line: Those who have collected and, above all, burned money over the years with precarious working conditions and ideas that are not innovations are withdrawing. Things are going well again in the core business, where research and development from universities and industry come together. It is the founders with their feel for the right topics that are important. And they have just rearranged themselves.