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MARKETS GERMANY | Technology

Insights into Europe’s Biggest Economy 1 / 22

GERMANYDECARBONIZINGDEUTSCHLAND

rnPage 32

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hold out new hopeNew

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The new government under Chancellor Olaf Scholz is
repositioning German society and the German economy with an even sharper focus on decarbonization.

Photo: Illing & Vossbeck Fotografie

FOCUS

HYDROGEN HOLDS THE
KEY TO GREEN G­ ERMANY
Green hydrogen is a central plank of the government’s plans for decarbonizing Germany. We look at
the H2 tech companies hoping to profit from the newopportunities and at the country’s increasing efforts totransition to a circular economic model.
page 4–19

START-UPS

MANUFACTURING»A new government
agenda further emphasizes the ‘two Ds’:decarbonization anddigitalization.«

Dear Reader,

Mechanical Servants
Herd Mentality

Demand for service robots is booming as companies find it harder to source routine labor.
page 28

A global boom in VC investments is swelling thenumbers of tech unicorns in Germany.
page 30

MORE ARTICLES IN THIS ISSUE:

INFORMATION TECHNOLOGYIn Brief: Revolutionary membranes, plasma
technology and space optics ................... page 20

AI Made in Germany
Move over, Silicon Valley: Germany is a leading
provider of artificial intelligence in Europe.
page 24____ The Digital Magazine
Online at:Medical Innovation: Customizing cancer treatments with single-cell biotechnology ......... page 22
Boom in Edtech: How corona opened up themarket for digital learning in Germany....... page 26
Start-ups: A platform for female founders andwhy women are the formula for success ... page 32
AHK Sweden: Swedes want to bring more of
their original designs to Germany ......... page 34

www.marketsgermany.com

How Germany Works: The federal, bicameral
government system explained .............. page 35

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Circulation: 5,000

Continuity and change might well be opposites,
but they’re not mutually exclusive, and functioning economies need both if they’re to staycompetitive. That, in a nutshell, is the guiding
principle of the new coalition government in Germany that assumed power in December, ending
Angela Merkel’s 16-year tenure as chancellor.
Germany’s new leader, Olaf Scholz from thecenter-left Social Democrats (SPD), was the country’s finance minister in the previous government
and embodies the continuation of the strengths
that have enabled Germany to navigate the ups
and downs of the coronavirus pandemic fairly well.
But of course not everything is the same.
Merkel’s conservative CDU/CSU are now in opposition. Replacing them in government are theenvironmentalist Greens and the business-friendly Free Democrats (FDP). That’s led to a new government agenda that further emphasizes the “twoDs”: decarbonization and digitalization.
This issue of Markets Germany will focus on
the former, but digital transformation will also
crop up a lot in the pages to follow. Both of these
initiatives require fundamental changes in German society, opening up business opportunities
for international companies with innovative solutions, whether they are in hydrogen energy andcircular economies or artificial intelligence ande-learning. We hope that the articles in this edition will give you some ideas and impetus toward
bringing your business to the new, post-­Angela-­
Merkel Germany.

of the publisher. Unless specified otherwise, the copyright for pictures is held by Germany Trade & Invest.
Order number: 21299
Cover: MaxBaumann/E+
via Getty Images

Dr. Robert Hermann, CEO
Email: invest@gtai.com

Photo: Merck

MAJOR PLAYER: BELÉN GARIJO
Unfortunately, the top echelons of corporate
Germany still have a long way to go on diversity. That’s why Belén Garijo made history
twice over in May 2021 when she became
CEO of pharmaceutical giant Merck. Not
only did she become the first non-German
to head the 350-year-old company, but also
the first woman to lead a DAX company on
her own. But Garijo is not comfortable withher history-making status being “the only
topic of conversation,” as she told a podcast
by Stern magazine last year.
As a doctor by training who began her
career in a Madrid hospital, Garijo has plenty
more to say. She was recruited to Merck in2011 by her predecessor, Stefan Oschmann.

She was made president of the company’s
healthcare division in 2015 and set abouttransforming the business into a key player
in oncology and immunology. “The transformation of companies is a never-ending
journey,” Garijo emphasizes. Merck is focusing on technological megatrends andorganic growth, but will also continue to be
involved where opportunities arise in orderto sustainably increase Merck’s profits inthe long term.
The German business scene is most fixated on her Spanish nationality. Top German
companies, especially if they see themselves
as global enterprises, are looking abroad more
often to fill leadership roles.

Quick facts
NAME

Belén Garijo

JOB TITLE

CEO

AGE

61

NATIONALITY

SpanishQUALIFICATION

Doctor of Medicine

COMPANY NAME

MerckLOCATION

Darmstadt

INDUSTRY ealthcare, Life
H
­Science, Electronics

GENERATED SALES€17.5 billion

MARKETS GERMANY | Focus

80%
Government target for­renewables in German electricity­consumption by 2030
Source: coalition agreement€392bnMarket volume of Germany’senvironmental technology
and resource efficiency sectors
in 2020
Source: Roland Berger

NO TIME TO LOSE
Scientists warn the world has less thaneight years to act if it is to limit global
warming to 1.5 degrees Celsius – widely
considered to be the maximum allowable rise to avoid environmental catastrophes. And Germany is taking thosewarnings very seriously. In January 2022,
German Minister for Economic Affairs
and Climate Action Robert Habeck announced that Germany would “roughly
triple” its efforts to meet its 2030 CO2
reduction goals to limit global warming. That means significant accelerations in the construction of renewableelectricity generating facilities, help forbusinesses that convert to sustainableproduction, enhanced standards for energy efficiency and heating in buildings,
and additional support for an industrial-scale hydrogen energy economy.

–65%
Germany’s target
for greenhouse gas
reduction by 2030
compared to 1990
Source: Ministry for Economic
Affairs and Climate Action
Photo: MaxBaumann/E+ via Getty Images

4

MARKETS GERMANY | Focus

Forest turbines – a coming trend? The
use of forest sites for wind turbines ispermitted in several German regional
states. By the end of 2020, there were
2,086 of them. As there are no national
regulations governing the constructionof turbines in forests, each regional
state makes its own rules.

DECARBONIZINGDEUTSCHLAND
The new government under Chancellor Olaf Scholz is repositioning Germansociety and the German economy with an even sharper focus on decarbonization.
.

Combining ecology and the economy is a goal Germany has pursued for
decades. Now, for the first time, thisconnection is anchored in the government’s
institutional structure. The coalition agreement between the new governing parties – Olaf
Scholz’s Social Democrats (SPD), the environmentalist Greens and the business-friendly
Free Democrats (FDP) – has created a new“superministry,” the Federal Ministry for Economic Affairs and Climate Action, headed up
by Robert Habeck of the Green Party.
“We think of economic development andecological preservation together,” the governing parties stated in the coalition contract
signed at the end of last year. “An energy infra-

structure for renewable energy and hydrogenis a precondition for Europe remaining able toact and compete in the 21st century.”
According to Germany Trade & Invest’s
director of Energy, Construction and Environmental Technologies, Thomas Grigoleit, thisamounts to “a concentrated effort to accelerate
the phaseout of coal as an energy source.” And
it will bring about a wealth of opportunities
for foreign investors in Germany. “The expansion of renewables, the creation of a hydrogen
economy and infrastructure, and the continuing decarbonization of the transportation andlogistics sector will offer a historical chance ingrowing markets for German and international
cleantech companies,” he says.

In any event, by law Germany must becomecarbon-neutral at the latest by 2045. That target
still requires big shifts in a variety of economic
sectors and in society as a whole.
Germany is investing massively in hydrogen as a carrier of energy produced by renewable sources. The technology is a major hopefor the decarbonizing industry. So, too, are thetransitions to electric mobility and circular
economies, bans on plastic packaging and thegreening of information technology, as you will
see on the pages to come.

ONLINEwww.gtai.com/energy

56

MARKETS GERMANY | Focus

GP JOULE... is a provider of renewable energy
generated from solar radiation, windand biomass and has been supplying
power for electromobility, district
heating and industry for many years.
In 2020, it launched Germany’s largest
green hydrogen mobility project todate: the eFarm H2 filling station in
Schleswig-Holstein designed to power
regional public buses. At the heart ofthe company’s ethos is the belief thatthe world can achieve a transition to100% energy from renewable sourcesin the future, and the desire to deepen
our connection with nature.

GERMANY‘S SERIOUS COMMITMENT TO DECARBONIZATION
The growth of cleantech in Germany shows its environmental protection policies are more than just spin.

NO. 2

4.4M

49%

Germany is ranked second globallytons of hydrogen

OF ALL PUBLICLY ACCESSIBLE ­HYDROGEN(AFTER JAPAN) IN TERMS OF PUBLIC ACCESSWERE ­PRODUCEDREFUELING STATIONS IN EUROPE

TO HYDROGEN REFUELING STATIONSBY GERMANY IN 2020are in Germany

Source: ecomento

Source: VCI; German Federal Statistical Office

Source: ecomento

Photo: Gesche Jaeger/laifMARKETS GERMANY | Focus

HYDROGEN HOLDS A KEY
TO A GREEN ­GERMANY
The task of decarbonizing a major industrial nation like Germany was never going to be easy. But
innovative German and international companies, with a helping hand from the government, aredemonstrating how green hydrogen could help turn the tide toward a cleaner economy.

The city of Oberhausen in North
Rhine-Westphalia is in many respects

Air Liquide is involved in a whole spectrumof green H2 projects in Germany. Along with

“Burgeoning interest in green H2”
Just up the road from Oberhausen, in the

typical of Germany’s western industrial heartland: a densely populated municipality of over 200,000 people with a gasworks for alandmark and factories and chemical plants as
far as the eye can see. It’s a perfect illustrationof both the challenges Germany is facing with
its transition to clean energy, and the criticalrole that green hydrogen will play in the energy
turnaround.
Oberhausen’s busy cityscape will soon bejoined by a 30-megawatt renewable hydrogenproduction plant being built by France-based
Air Liquide in partnership with Siemens Energy. Scheduled for completion in 2023, the newproton-exchange membrane (PEM) electrolyzer facility will be integrated into the existing
local pipeline infrastructure of Air Liquide to
supply key regional industries and mobility.
What’s also striking is that the plant will sell
not only hydrogen but oxygen, which would
otherwise be wasted, for use in steel-producing
blast furnaces. That’s one example of how thehydrogen economy can help other sectors lower
carbon emissions. In August 2021, the Oberhausen project was awarded EUR 10.9 million
from the Federal Ministry for Economic Affairs
and Energy.
For Air Liquide, simple geography was amajor factor in its choice of location. “We carefully assessed which country we should choose,and Germany’s Oberhausen won out,” says
Andreas Voss, a spokesman from Air Liquide
Germany. “It’s crucial to build up hydrogenproduction capacity and hydrogen applications simultaneously in geographic proximity
to one another if you want to narrow the pricegap between grey (non-ecological) and greenhydrogen.”

Siemens Energy, it is engineering mass-produced components to lower the cost of producing renewable H2. It’s been involved in apilot program for fueling Daimler trucks withliquid hydrogen. It supplies green H2 and amobile filling station to a pilot program forhydrogen-drive trains on Baden-Württemberg’s Tübingen–Sigmaringen line. And it isscheduled to build a centralized high-pressure
H2 filling facility for the southwest German
H2Rivers project to support fuel cell mobility.

city of Duisburg, the leading American provider of green hydrogen, Plug Power, is also
expanding its presence in Germany with a
new European headquarters. The facility willhouse an innovation center with engineeringlabs and technical support, a monitoring,
diagnostics and technical support center, agreen hydrogen generator with electrolyzer
infrastructure, a shipping and logistics center, and a training space. That entails quite
a financial commitment.

WHAT IS THE­ENERGIEWENDE?
The word Energiewende literally means “energy transition” and refers toGermany’s effort to switch to clean energy sources in order to limit theeffects of climate change. The main policy target is carbon neutrality
by 2045, and the first major intermediary milestone is to reduce 1990
emission levels by 65 percent by 2030.
From mid-2019 to mid-2021, the German government provided morethan EUR 80 billion in investments related to climate change prevention in the context of its Climate Protection and Economic Stimulus
Program. Between 2022 and 2025, the government plans to increasethat funding by tens of billions of euros. The economics think tank ifo
Institute expects the energy turnaround to cost Germany between 0.4
percent and 2.5 percent of GDP annually until 2050. The biggest shareof this will go toward investments in facilities and infrastructure, fromthe generation and conversion of renewable electricity to smart grids,
charging stations for electric cars, renewable power for district heating,and everything in-between.

78

MARKETS GERMANY | Focus

REASONS WHY GERMANYIS SET TO LEAD IN GREENTECHNOLOGY

1

Lasting commitment to sustainability
Germany has set itself legally binding climate
goals to achieve carbon neutrality by 2045.
This will continue to inform policy decisions,providing transparency to consumers andbusinesses, who will know where the country
is headed.

2

History of pioneering green technologies
Germany was one of the first countries in theworld to think seriously about “going green”
and to put strategies in place. German businesses and institutions have decades of experience and have built up a wealth of expertise,
networks and intellectual property.

3Emphasis on R&D
Germany’s strong industrial base and record-level of investment in R&D make it
uniquely suited to develop green products
and technologies. Environmental companies
accounted for 15 percent of Germany’s GDP in
2020, with both employment and turnover on
the rise.

4

Massive investments in decarbonizing the
economyGermany has already invested heavily in solar and wind energy. For the 2022–2025 period, the German government plans to increase
funding for projects related to climate protection by tens of billions of euros.

Heiko Staubitz, GTAI senior manager“The expansion to Europe comes as Plug Powersupports the local development of green H2

faces a growing customer base abroad with theburgeoning interest in green hydrogen energy,” commented Plug Power CEO Andy Marshin a meeting with Andreas Pinkwart, North
Rhine-Westphalia’s Minister of Economic Affairs, Innovation, Digitalization and Energy, lastSeptember.
Spurring all these activities are programs
and incentives at the regional, national and European levels. Most prominent is Germany’s
National Hydrogen Strategy, which sets the legislative agenda and allocates EUR 9 billion+ ingovernment money.
Germany Trade & Invest’s senior manager ofhydrogen, smart grids and energy storage, Heiko
Staubitz, points out that the National Hydrogen
Strategy has been providing the right stimuli forthe hydrogen sector to pick up steam. “The regulative framework provides the guidance while the
incentive programs accelerate the progress,” says

capacity and a large network of hydrogen
filling stations. Meanwhile, the Ministry of
Education and Research has allocated EUR
860 million for the Helmholtz Cluster for a
Sustainable and Infrastructure-Compatible
Hydrogen Economy (HC-H2) in the Rhineland area.
“The transformation of the coal regions
offers enormous potential for the hydrogensector, with existing research centers being
significantly expanded and new ones established,” Staubitz explains.

Staubitz. “We have been receiving many inquiries
from companies around the world with promising project ideas and innovative solutions.”
And the subsidies are set to rise and rise. In
June 2021, the German government approved
an eight-billion-euro immediate decarbonization action program that will also fund greenhydrogen projects.
Replacing coal with hydrogen
The government is particularly keen on developing hydrogen-associated industrial andresearch clusters in the areas directly affectedby Germany’s ongoing phaseout of coal mining:
Lusatia, Rhineland, Helmstedt and Central
Germany.
In Lusatia, for instance, the Ministry for
Digital and Transport’s HyStarter projectH2 ­INVESTMENTOPPORTUNITIESIn the first half of 2022, GTAI will conduct a
series of roadshows to promote hydrogen-­related industrial and research clusters inthree of Germany’s traditional coal mining
areas: Lusatia, Rhineland and Central Germany. The events will highlight investment
opportunities at every stage and level of thehydrogen value chain. For more information,
contact sandra.moser@gtai.com.

Last May, more than 60 initiatives were selected for support as part of the National
Hydrogen Strategy and earmarked as Important Projects of Common European Interest (IPCEIs). Spread across all of Germany,
they represent the four main aspects of thestrategy rollout: hydrogen production, infrastructure, industrial uses and mobility uses.
Among the foreign companies participating
in IPCEIs are Vattenfall, Shell, BP, Mitsubishi,Ørsted Wind, ArcelorMittal and, of course,
Air Liquide.

Photo: Illing & Vossbeck Fotografie

4»The transformation of the coal regions offers enormous potential forthe hydrogen sector, with existing
research centers being expanded
and new ones being established.«

MARKETS GERMANY | Focus

Running on renewables
Germany’s support for green hydrogen will
create countless new markets and niches,most prominently for companies involved in
producing electricity from renewable sources.
Clean electricity for powering electrolyzers will
be needed in huge quantities when the greenhydrogen economy takes off. That means aswelling market for wind and solar energy projects both inside and outside Germany.
The first big projects in this area are alreadyunderway. One of them is AquaVentus on theisland of Helgoland in the North Sea. It willbring together 40 international companies
and institutions with the goal of producing
one million tons of green hydrogen annuallyand feeding it via pipeline into a special H2
network on the mainland.
“AquaVentus is a cornerstone of the German National Hydrogen Strategy,” says Jörg
Singer, the company’s chief executive andthe mayor of Helgoland. “We’ve got support
from the German ministries of research andeconomic affairs, and we’re awaiting support
from Brussels.”Room for mid-sized companies
There’s potential for smaller and medium-sized international companies to get
involved too. For example, Swiss-based power
producer aventron, which operates renewable energy power stations in Switzerland,
France, Italy, Germany, Spain and Norway,
and has recently acquired the 7-megawatt
Hellberge V wind farm south of Berlin. As
aventron’s tenth wind farm in Germany, it
will complement its 6.1-megawatt Hellberge
III wind farm built in 2016.
“Germany is attractive for us due to thegeographic proximity to Switzerland, its
precise laws and long-lasting and consistent government support for wind energy,
as well as ample investment opportunities,”says Antoine Millioud, aventron’s CEO. “Wehope to set up or acquire another two or threewind farms over the next five years to arrive
at a portfolio of more than 100 megawatts.”
Contributions from international SMEs
like aventron will play a vital role in Germany’s bid to achieve its green hydrogen goals
and to change the energy game in central
Europe.

9

GERMANY IS
EUROPE’S BIGGEST
H2 FACTORY
Annual hydrogen production capacity in Europe in 2018
by country and by share (in million tons)

NETHERLANDSGERMANY21 %12.6 %
1.5 MT

2.5 MT

POLAND11 %1.3 MTITALY

FRANCE

7%

6%

SPAIN

BELGIUM

0.8 MT6%
0.7 MT

0.7 MT5%
0.6 MT

Source: Hydrogen Europe

CONTACT
heiko.staubitz@gtai.com
GTAI expert for ­hydrogen &­energy infrastructurewww.gtai.com/green-hydrogen

10

MARKETS GERMANY | Focus

ELECTRIFYING
THE MARKET

Photo: Fastned

Coming soon to supermarkets, street corners or private residences: charging ­stations
for electric vehicles. As the German government ramps up investment into the country’s
charging network, it’s a good time for foreign investors to join the e-revolution.

It may not have been blockbuster news
but in October 2021 there was a pivotal
moment for the e-charging market inGermany: The national government put out
new tenders for its EUR 2 billion investment
into establishing a network of a thousand new
fast e-charging stations across the country.
In cities and on the highways, land is being
made available as part of a major push to win
over electric car skeptics.

THE BOTTOM LINE
Carmakers are producing more
and more fully electric vehicles.
Now, the infrastructure needs
to expand to meet the demand– a challenge worth billions inGermany.

The companies that win those bids will bewell positioned to determine the future of
the market. Among them is Virta Germany,
the German branch of the Finnish e-charging
giant Virta Global, whose managing director Nicolai Woyczechowski says his company is determined to establish “a big presence” in Germany. “Germany wants to go
this way, the targets are already set by thegovernment, and the subsidies are heavy,”
he says.

MARKETS GERMANY | Focus

11

At this new e-charging station in Limburg, operated by Fastned, customers
can charge their cars for a 300-kilometer
range in 15 minutes.

POWERING UP AT HOME

8–12
MILLION

The chicken and the egg
Germany Trade & Invest auto industry expert
Stefan Di Bitonto also sees this as a crucial
moment. “We always had a chicken and egg
problem before,” he says. “Should we first havecharging stations, or should we first have electric vehicles?”Industry seems to have found a way throughthe dilemma having started to deliver electriccars on a massive scale. According to Germany’s Motor Transport Authority, the KBA, thenumber of fully electric cars on German roads
increased from 2,300 in 2011 to some 517,000
on October 1, 2021. And observers expect thosenumbers to grow steadily as EV infrastructure
is put into place.
“The hybrid era doesn’t seem to havestuck – we’re really moving fast toward fully
electric vehicles,” says Di Bitonto. “But the infrastructure is lagging behind. We need a real
boost in investments. The EUR 2 billion means
there’s a lot of assets out there, so that would
be a great opportunity to profit.”
The heart of a revolution
That’s why people like Linda Boll are so enthusiastic about the German market. The publicaffairs manager at Dutch e-fueling specialist
Fastned says Germany is key to her company’s plans. Fastned, which has won multi-million-euro German government subsidies in
the past has been expanding rapidly acrossEurope since its foundation in 2012, with fastcharging stations in the Netherlands, Belgium,
Switzerland and the UK.
Most roads that traverse Europe passthrough Germany. “It’s a no-brainer: Germany is at the heart of Europe,” says Boll. “Geographically and strategically there was never

NUMBER OF DETACHED AND SEMI-­
DETACHED HOMES IN GERMANY AT
WHICH CHARGING POINTSCOULD BE INSTALLED
Source: dena

74.8
PERCENTOF HOUSEOWNERS WOULD PREFER
TO CHARGE THEIR VEHICLESAT HOME
Source: EuPD Researchany doubt that Fastned would need to have astrong foothold in Germany in order to build
this Europe-wide network.”
Both Fastned and Virta were founded lessthan a decade ago and both identified Germany
as a prime market. Virta was just three years
old when it opened its first offices in Germany
in 2016. It’s been expanding its customer baseever since: The firm now counts state energy
utilities like Pfalzwerke and private-sector giants like E.ON among its partners.
Two problems, one solution
As Woyczechowski points out, e-mobility provides solutions to two urgent problems, notjust one: how to make transport cleaner andhow to store energy from naturally variable
sources like the sun and wind. “When electric vehicles are parked, you can use them as astationary battery,” Woyczechowski says. “Youcan connect them to the electricity grid as astorage form.”

The incentive for the customer is simple andcompelling: Your car is earning while it’sparked. “You will get reimbursed for selling,say, 10 percent of your battery capacity duringhigh-peak times. Isn’t that nice?” says Woyczechowski. “This is a tremendous opportunity
to help accelerate the transition to renewableenergy in Germany.”
Virta already has these operations up andrunning in three European countries – Finland, the UK and France – and is hoping to rollthem out in Germany in the next two years.
While the technology is already in place, thekey to commercializing the model, according
to Woyczechowski, is navigating the varying
grid regulations in different countries. He adds
that major German carmakers like Volkswagen
have already shown interest in investing inthis technology.
Cars have long been at the heart of Germany’s economy, which makes the transition toelectric all the more critical. The industry isheavily focusing on fast charging now to overcome consumer skepticism. Fastned claims its
stations can charge a range of up to 300 kilometers in 15 minutes, depending on the capacityof the electric car. “The customers will come,”says Boll. “As we see the big car manufacturers
embracing e-mobility, we’re 100-percent convinced of that.” The revolution is underway –the infrastructure needs to keep up.

CONTACT
tobias.rothacher@gtai.com
GTAI expert for e-mobility
infrastructurewww.gtai.com/charging-­
infrastructure

12

MARKETS GERMANY | Focus

German IT
GOES GREEN
Digitalization can be both a curse and a blessing from a sustainability standpoint. On the one
hand, information technology makes companies more efficient. On the other, IT itself consumes
a lot of energy. More and more firms are therefore investing in sustainable options.

THE BOTTOM LINET

he new data center of IT specialist
Equinix in Frankfurt heralds a newera. Inside the building – whose
exterior is covered with plants and greeneryand features a roof garden – energy-efficient,high-performance computers hum, and fanssupply the building with cool air. This low-energy building is intended as a model for theother 65 outposts of the US parent company,
which has pledged to become climate-neutral
by 2030.
Data centers house vast numbers of servers
and routers and consume huge amounts ofenergy as well as releasing heat. The all-encompassing advance of digitalization means
the amount of data and with it the energy
consumed is growing exponentially. This canoutweigh the environmental benefits of “goingdigital,” including measures like saving paperor streamlining operations.
The result is a new niche known as green
IT. “This market is growing in Germany,” says
Niklas Meyer-Breitkreutz, expert for digitalization and sustainability at the industry association Bitkom. “Companies that bring digitalization and sustainability together have acompetitive advantage in the German market.”
Software and hardware
In May 2021, in a global survey of 1,000 companies with annual sales of more than USD 1
billion, Capgemini Research Institute foundthat over half (52 percent) believed that techCalls are growing in Germany
for the information technology
industry to become more sustainable. That’s created a newmarket for “green IT.”

GOING DIGITALAND G­ REEN TOGETHER
Share of companies per sector that citedenergy savings as the reason for digitalization projects in Germany (2017–2020)

36%
ICT HARDWARE

27%
ICT SERVICE PROVIDERS

30%
MEDIA INDUSTRY

Source: ZEW

corporations should take sustainability into
account in their products and services. One
way to do that is to develop effective softwarethat uses less computing power: 45 percent ofrespondents would be willing to pay up to 5
percent more for software of this sort.
Equinix has recognized Germany’s potential as an investment location and has been
operating its own data centers here since 2014,
exclusively with electricity from renewablesources. “Our customers are increasingly interested in their IT becoming more sustainable,”says Jens-Peter Feidner, managing director of
Equinix Germany.
And software isn’t the only approach.
Equinix operates its data centers using stateof-the-art hardware. The Frankfurt facility has
a power usage effectiveness (PUE) rating of
1.2. PUE indicates the amount of electricity
consumed in relation to the computing power provided (the closer to 1.0, the higher theefficiency). On average, German data centersreach 1.7 to 1.8.
Higher efficiency values come with ahigher price tag. Equinix invested EUR 110
million in its Frankfurt site – but it turned
out to be money well spent. The company
has recently added another data center in thecity and four more are in the works – representing a total investment of around EUR 1.1
billion. Equinix hopes to take advantage ofthe growing interest in Germany in sustainable IT expertise.

13

MARKETS GERMANY | Focus“Many German companies are developing
exciting innovations that make IT more sustainable,” says Feidner.
One example is the start-up etalytics. It developed the artificial intelligence used by Equinix to measure whether it can make the coolingof individual servers even more energy-­efficient.
More location advantages
Innovation is just one of the reasons why
Equinix is expanding its presence in Germany. Frankfurt is Germany’s financial center and a banking metropolis whose international significance has grown markedly

It’s also home to Europe’s largest data hub
DE-CIX, which has served as a magnet for attracting large computing power companies.
Furthermore, the German power grid is stableand uses a large and growing share of renewable energies.
“This is an enormous locational advantage,”says Marc Schattenmann, head of the Department for Digitalization at the German Ministry
for the Environment, Nature Conservation, Nuclear Safety and Consumer Protection.
The German government is taking a hardlook at its own IT emissions and has cut themby half since 2008. This was primarily achieved

after Brexit.

through the acquisition of sustainable IT prod-

ucts. These days, when government administrations purchase new computers, their decisions are based in part on the products’ energy
efficiency. The public sector in Germany has agreat deal of financial clout and will be paying
even more attention to sustainability in its IT
contracts and products. Thus, companies inGermany with expertise in green IT could evenattract the national government as a potential
customer.

CONTACT
benedicte.winter@gtai.com
GTAI expert for sustainability

Equinix’s state-of-the-art, low-energy
data center in Frankfurt, which is cov­
ered in greenery, cost the US company
EUR 110 million.

ENERGY-DEVOURING SERVERS
Energy consumption of servers and data centers in Germany in billion kWh/a

2010

2011

Source: Borderstep Institute

2012

2013

2014

2015

2016

2017

2018

2019

2020

Photo: Equinix

10.5 10.7 10.9 11.2 11.5 12.0 12.4 13.3 14.0 15.0 16.0

14MARKETS GERMANY | Focus

WASTEFUL
PACKAGING
End-­consumer ­plastic waste in­Germany by ­application in 2019

The tide is turning as German consumers are rejecting unnecessary
packaging and single-use plastics
in favor of eco alternatives.

PACKAGING

59.1 %
CONSTRUCTION

9.8 %ELECTRONICS

5.9 %AGRICULTURE

5.5 %VEHICLES

4.4 %HOUSEHOLD GOODS

3.2 %
OTHER

12.3 %
77 %of German consumers prefer to buy productsthat use as little packaging as possible
Source: Ipsos 2019

Photo: photka – stock.adobe.com

Source: Conversio

MARKETS GERMANY | Focus

15

Non-Plastic­FANTASTICThe European Union has dramatically restricted single-use plastics and may eliminate
them entirely. That’s shaken up the market in favor of product developers who areable to think outside of conventional containers.

As children, many of us were told
not to chew on straws or spoons. But
for one inventive German company,
Kulero, that’s precisely the idea. Its novel,
non-plastic disposable eating and drinking
utensils are the brainchild of Hemant Chawla
and Juliane Schöning. Now based in Göttingen in Central Germany, Chawla began developing the technology after being appalled by
the amount of discarded plastic trash during
a festival in his native India in 2017.
Kulero’s products are made of breaddough and therefore entirely edible. A Kulero ice-cream spoon is not just a means foreating a dessert. It’s part of the sweet itself
and completely vegan to boot. After some
initial success in India, the company entered
the German market in 2020. It claims it has
replaced more than one million plastic spoonsand has dug out a unique niche in the market.
“There aren’t currently any viable alternatives,” Chawla told the German businessmagazine Wirtschaftswoche. “Wood and paper
have a taste many people don’t like. Other
products aren’t stable enough for hot foodand fall apart.”
Post-ban boom for eco alternatives
If the European Union has anything to do withit, Kulero’s success story won’t be unique. On
July 3, 2021, the bloc instituted a wide-ranging ban on plastic cotton-bud sticks, cutlery,plates, straws, stirrers, balloon sticks, polystyrene drink and food containers and non-biodegradable plastic bags.

THE BOTTOM LINENew EU regulations will­drastically reduce single-use
plastics in the years to comeand generate opportunities forforeign companies with smart
new packaging solutions.

The restrictions form part of the EU’s Circular
Economy Action Plan, adopted in 2020, whichis in turn part of the bloc’s Green Deal. Thishuge initiative addresses big global challenges
including ocean pollution: The Heinrich Böll
Foundation, headquartered in Germany, estimated some 930 billion pieces of plastic waste
ended up in the North Atlantic in 2019 alone.
The new EU restrictions will help reducethat kind of pollution, but many types of plastic containers and packaging are still allowed,
if in restricted form. They include PET bottles, immediate-consumption beverage andfood containers, packets, wrappers, tobacco
filters, sanitary items and wet wipes. Germany’s Ministry for the Environment, Nature
Conservation, Nuclear Safety and Consumer
Protection estimates that Germans use almost
three billion disposable coffee cups every year
– around 320,000 an hour.
So it seems inevitable that the market
for non-plastic alternatives will expand exponentially. Moreover, Germany will also needsystems for distributing and collecting multiuse replacement products. “This new frame-

work will become even more noticeable in the
coming months,” expert Victoria Kintzinger
explains. “Restaurant-related companies are
already active here. But alternatives for personal care products are also being increasingly
produced and marketed.”
Large-scale partners
Wherever there’s a large demand, businessheavyweights will quickly jump in to meet it.
Some of the major players in the food and drink
industry, for instance, are hard at work figuring
out how to decrease their plastic consumption.
“Danone, Nestlé and Unilever are alreadyinvesting millions in alternative packaging,”
Duy Ton, a portfolio manager in Union Investment’s sustainability team, told the Internet
platform T-Online.
Soft drinks giant Coca-Cola is also moving
its portfolio toward more sustainable packaging and has even looked at paper bottling.
So the chance is there for innovators to scale
their business rapidly while doing something
to solve one of the planet’s most pressing environmental problems.

CONTACT
flerida.regueira@gtai.com
GTAI expert for recycling
www.gtai.com/environmental-­technologies

MARKETS GERMANY | Focus

U
T

CL

VI
CI R R

16

S
U
O

S
E

Waste not, want not, runs
the old adage, but traditionally, Germany has
been more interested inrecycling than in circular­economies. All that’s starting to change.

GERMANY’S CIRCULAR ECONOMY IS ON THE INCREASE
Projected annual growth in Germany from 2020 to 2030

Source: Roland Berger

CIRCULAR ECONOMY OVERALLRECYCLING
CO2 CAPTURE

Photo: TSUNG-LIN WU – stock.adobe.com+ 5.9%+ 13.6%+ 34.6%MARKETS GERMANY | Focus

In the second half of 2021, the global shortages in raw materials and essential industrial components and parts underscoredhow vulnerable supply chains are in Germany
and most other developed countries around theworld. Consumers were forced to wait months,
for instance, for new cars, and businesses lostout on revenue. But what if there were a way toprogram the procurement of materials into the
production process itself?
There is, and it’s called the circular economy:a model of production and consumption where
existing materials and components are modularized and utilized as thoroughly as possible.
The concept goes above and beyond conventional
recycling. And for Germany, a country not blessed

German solutions being well received internationally.”
Germany’s green foundations
The policy groundwork for the current dynamic was laid early. For four decades, companies
in Germany have tapped into incentives of theEnvironmental Investment Program (Umweltinnovationsprogramm) to invest in innovativetechnological processes.
In 1996, the Circular Economy Act came into
force, setting clear rules for waste avoidance, reuse and recycling. And since 2009, all companies
selling packaged products to end-consumers are
obligated to pay license fees to the recycling sector
under the Dual System.
But regulation alone cannot bring about thesea change that is needed. Impetus must comewith an overabundance of natural resources, it’sa logical path to take.
Statistics underscore how central circular from innovative companies bringing original new
economies can be to Gersolutions to market.
many’s future: The Minis“Germany is a world
try for the Environment,
champion in recycling
Nature Conservation, Nuand has the best infraTHE BOTTOM LINE
clear Safety and Consumer
structure for the waste
Germany wants to take recyProtection’s most recent Greindustry,” said Hencling to the next level by harenTech Atlas put the market
ning Wilts, director ofnessing sustainable production
value of Germany’s circular
the circular economy
models and waste repurposing
economy sector at EUR 24
division at the Wuptechnologies towards a truly
billion. That amounted topertal Institute forcircular economy.
over 16 percent of the world
Climate, Environment
total for 2020. The Atlas also
and Energy, speaking
predicted average annual
to Handelsblatt. “Butgrowth of 5.9 percent, with
we’re only average
market value reaching EUR 32 billion by 2030.
where the circular economy is concerned.”
As a result, big companies in Germany are
A new economic model
waking up to the need for change and the potential
In November 2021, the German business newspaper business opportunities that entails. Chemicals
Handelsblatt published a study by the Boston Con- firm Covestro says it wants to switch completely
sulting Group projecting that Germany could source to a circular economic model. BASF, the Gerup to 75 percent of many materials from recycling. man multinational chemical company, is buildTo achieve this, the country would need to ing a new battery recycling prototype plant ininvest EUR 50–60 billion between now and 2040, Schwarzheide, eastern Germany. The plant will
but it would also create countless business oppor- use innovative technology for extracting lithium,tunities and one million new jobs in the process. nickel, cobalt and manganese from end-of-life
By comparison, the sector currently employs ap- lithium-ion batteries and production scrap. And
proximately 310,000 people.
at last year’s international mobility show in Ger“Recycling plays an important role in a rap- many, the IAA Mobility, BMW debuted a prototype
idly increasing number of areas, such as battery of a circular concept car made nearly entirely ofrecycling and wind turbine recycling, and the recyclable or already used materials. It’s called
whole area for investments in recycling technol- “i Vision Circular.”ogies made in Germany is gaining momentum,”says expert Victoria Kintzinger. “Environmental International cooperation
technology and the companies active in this In an example of groundbreaking international
field play an outstanding role for Germany, with cooperation in the private sector, Dresden-based

17

MARKETS GERMANY | Focus

equipment manufacturer Biofabrik and Switzerland-based ENESPA are currently setting up a
recycling plant for mixed plastic waste from theDual System. It is located at Schwarze Pumpe,
a coal energy plant scheduled for decommissioning and an industrial park near Spremberg
in the eastern regional state of Brandenburg.
“In Spremberg, our project was welcomedwith open arms,” says ENESPA CEO Cyrill Hugi.
“Choosing Germany as our first market was ano-brainer, because there is strong policy pressure to collect plastics, and refineries are underpressure to include recycled plastics in theirmix of inputs. The location will allow us to adhere to the wall-to-wall concept, meaning CO2
emissions from the transportation of waste andrecycled materials will be kept to a minimum.”
ENESPA’s unique feature is that it only
comes into play after PET, PVC and metals
have been removed from the Dual System byother recyclers. In other words, ENESPA takes
those waste plastic types that would otherwise
be incinerated. It does so by heating the waste

WHAT IS THE­CIRCULAR­ECONOMY?
The European Union defines
the circular economy as amodel of production andconsumption which involves
sharing, leasing, reusing,
repairing, refurbishing andrecycling existing materials
and products for as long as
possible. The new approach
extends the life cycle ofproducts and represents acomplete departure from theestablished, linear economic
model, which follows a pattern of “take – make – consume – throw away.”

plastic, breaking down its molecules, then vaporizing, condensing and detoxing them tocreate paraffin oils for use in plastic-making
refineries.
The supply of suitable plastic waste for thissystem is virtually inexhaustible, as modern
food packaging usually consists of multiple
chemical compounds that cannot be separated
mechanically. According to ENESPA, the incineration of one kilogram of such plastic typically creates three kilograms of CO2. E­ NESPA
ensures these carbon emissions remain locked
up in the plastic production cycle.
“We get EUR 80–120 per ton from the Dual
System for processing the waste and another
EUR 300–500 per ton from selling the paraffin oils to the refineries, making the revenue
equation highly predictable,” says Hugi. “Ournext milestones will be scaling up the Schwarze
Pumpe plant from the current pilot of one ton
to eight tons per day and building new plants
elsewhere in Germany, Switzerland, France,
Italy and other European countries.”
Putting bad waste to good use
Change is also imminent in other areas. Since
the start of 2021, the German subsidiary ofFrance-based Air Liquide has been running afacility in the western German town of Oberhausen that recycles waste CO2 from anotherchemical plant.
After being purified, the CO2 is sold to foodprocessors for the production of things likesparkling mineral water and as a filling gas forfood packaging. It’s also sold to Dutch tomato
growers who use carbon dioxide to accelerate
the tomato growth cycle in their greenhouses.
Other customers include welders and chemicalplants, where CO2 is used as a reaction medium
and in metal and plastic cleaning processes. Air
Liquide says its Oberhausen facility reduces
CO2 emissions by an amount equivalent to that
produced by more than 30,000 cars.
“Even though Germany is increasing its
capacities for green hydrogen, CO2 management will remain a pressing issue for many
years to come,” Andreas Voss of Air Liquide
Germany points out. “In the past, such major
CO2 recycling efforts have not been feasible,
but with rising public awareness and new use
cases, they are becoming very interesting formany companies that rely on processes thatcreate CO2.” It’s time for Germany to look for
new business models in “waste” products.

STARTING
A ­CIRCULAR­REVOLUTION
Interview with Sarah Brückner, managing
director of the VDMA Waste Treatment andRecycling Technology Association
What has made Germany’s recycling sector
as big as it is now?
Very early on, Germany began to create apolitical framework for a recycling economy.
Especially the Packaging Directive (Verpackungsverordnung), which came into force in theearly 1990s with heavily incentivized investment, advanced this project.
What segments of recycling technology
will increase in importance in the future?
The entire plastics industry is transformingfrom a linear to a circular economy. Waste andrecycling technology has developed enormously in recent years. Let me give you an example:
For decades, black plastics were not considered
recyclable. With modern sorting machines, thisis possible today. However, there are otherfields, such as electrical and electronic waste(WEEE), where there is still potential for development. Another key segment is building
demolition waste. Right now, we are tearing
down many buildings from the 1990s. In thatera, not much was known about toxicity of
construction materials. That’s changing.
What will the VDMA Waste Treatment
and Recycling Technology Association
be showcasing at IFAT, the Trade Fair for
Water, Sewage, Waste and Raw Materials
Management in Munich in May/June 2022?
We will focus on plastics recycling. Visitors canexperience the odyssey of a shampoo bottle
from disposal to the very end of the recycling
process. In addition, we will be hosting our famous live demonstrations for biomass recycling
and mineral recycling.

CONTACT
flerida.regueira@gtai.com
GTAI expert for circular economies
www.gtai.com/recycling

Photo: VDMA18

MARKETS GERMANY | Focus

19

WHY GERMANS LOVE
Cargo Bikes
The demand for cargo pedal bikes and light electric logistics vehicles is growing in Germany.
Consumers and delivery companies are looking for nimbler and more sustainable alternatives
to cars and vans for shorter journeys.

country of cars,” but these days its
city streets are increasingly home toa new breed of transport: cargo bikes. They’rea sustainable alternative for local journeys andnimble, last-mile logistics. Families are using
them to schlep kids around and get groceries.
Delivery companies employ them to bring takeout food and postal services to move packages.
Growing numbers of Germans are getting on
their cargo bikes as a low-cost and eco-friendly
transport option.
International companies such as the Dutch
cargo-bike leasing company DOCKR are moving
in on the opportunity. It recently signed an agreement to supply the booming Gorillas delivery
chain with hundreds of bikes for deliveries incities across Germany. “The market is boomingwith cargo bikes,” says the CEO of DOCKR’s German operation, Shahram Rezasade. “The zeitgeist has changed. People are really looking into
alternatives.”
Germany represents a substantial business
opportunity. In 2021, there were more than
100,000 cargo bikes on its streets and sales figures are expected to increase by 50 percent eachyear. It’s a logical development: More and more
people are realizing that for short journeys bikes
can be more effective and convenient than carsor delivery vans. That’s coupled with a growing desire to go green. While electric cars havereceived the bulk of the investment and state
support, switching from internal combustion
engines to electric won’t eliminate traffic jams
or speed up deliveries.
“Light electric logistics vehicles”
Drawing on the country’s engineering expertise,
German entrepreneurs are coming up with somenovel ideas: For instance, Ducktrain from Aachen

offers four-wheeled, battery-driven “ducks” justbigger than a standard pallet and small enoughthan a bike,” Kai says. “For companies involvedin brake components, mechatronics, tires, elec-

to fit onto sidewalks and bike lanes. Up to fivecan be formed into “duck trains,” dramaticallyincreasing the amount of cargo a single rider canmanage. “It’s five times the payload you would
have from a single cargo bike,” says Ducktrain
CEO Kai Kreisköther.
Kreisköther says the German market is ripe
for investment from automotive and other suppliers – and recommends looking at the growing
market in terms of “light electric logistics vehicles” rather than “cargo bikes.” “There is a wholesegment that is smaller than a car and bigger

tronics, there’s a huge opportunity here.”
The consumer market is booming, too. The
Berlin showroom of Punta Velo, a cargo bike dealer with stores across Germany, has long waiting
lists for people hoping to buy family cargo bikes.
Punta Velo CEO Gerd Lemken says more families
are opting for a cargo bike – often with an electricmotor – rather than a second car, for both convenience and environmental reasons. “These aren’thippies from the ‘70s,” Lemken says. “They’re
paying full price for a transportation alternative
that’s still much cheaper than an electric car.”

100,000
Number of cargo bikes in­Germany in 2021.

50%
Expected cargo bike sales
growth in Germany
per year.

Source: European Cargo
Bike Industry Survey

Photo: picture alliance / Westend61 | Roman MärzingerGermany may be known as “theIN BRIEF
Investors around the world admire the spirit of invention that inspires theGerman economy. Here we throw the spotlight on some of the trends andresearch projects coming from Germany‘s east.

MUCH ADO ABOUT MEMBRANES
Two innovative water filtration systems from

Photo: MATTHIAS BUEHNER – stock.adobe.com

eastern Germany
About 250,000 square meters – that’s how much MYTEX membrane the Thuringian company WTA Technologies produces every
year. “We are able to treat wastewater for half a million people,”says its managing director Carsten Bachert. The firm from thecity of Gotha custom-designs its filtering systems to customers’
needs and retrofits existing ones with its patented, non-woven
membranes. They are able to filter out even the smallest insoluble
particles from water.
Further north in Halberstadt, Saxony-Anhalt, another company
is picking up awards for cleaning up H2O. Nanostone Water
has developed a system that combines the two most common
types of filter membranes – plastic and ceramics – to maximize
effectiveness and ease of cleaning. “Because our membranes
last a long time and can be cleaned while in use, we saveseveral steps,” explains Nanostone CEO Christian Göbbert. “In
this fashion, each module or filter unit can purify up to 5,000liters of contaminated water an hour.” In 2020, Nanostone wasawarded an IQ Innovation Prize for Central Germany.
www.wta-tec.com/en/
www.nanostone.com

HELP FOR DIABETICS
Novel protein bandage to treat
venous ulcers

The material is based on the protein elastinthat has many of the same properties as humanskin. “Elastin is chemically and enzymaticallyextremely stable, biocompatible and does notproduce immunological rejections when used as abiomaterial in humans,” says Christian Schmelzer
from the project team at the Fraunhofer Institutefor Microstructure of Materials and Systems.
www.imws.fraunhofer.de/en

Photo: © Fraunhofer IMWS

Venous ulcers predominantly affect older people and diabetics and are a growing problem
in ageing societies. Academic researchers fromthe city of Halle in Saxony-Anhalt have cometogether with private enterprise to develop a
new sort of bandage to treat these extremely
painful chronic wounds more effectively.

Traces of time at the microstructural level: scanning electron micrographs of elastin fibersof the skin of a 6-year-old subject (left) and a 90-year-old subject (right)

METAL MIRRORS FOR SPACECUTTING EDGE

Award-winning inventions from Fraunhofer IOF spin-off

Plasma technology makes metal cutting cleaner

Photo: Blue Planet Studio – stock.adobe.com

A company from the Brandenburg town of Finsterwalde wants to improve theway we cut aluminum and steel by using plasma technology. Kjellberg has beenworking in this area for 60 years and its HiFocus Technology promises metallicallybright cut surfaces, narrow kerfs and significantly less dross formation.

The Thuringian city of Jena has a tradition in optics that goes back hundreds of years.
Now SPACEOPTIX, a spin-off from the Fraunhofer Institute for Applied Optics andPrecision Engineering, has developed optical metal mirror systems that can be used
for earth imaging and a range of industrial and scientific applications.
Metal optics offer several advantages: They can be formed into complex shapes,
equipped with integrated functionalities and manufactured in high volume. SPACEOPTIX technology is the result of more than 20 years of applied research. The company,
which was only founded in 2020, has already won several awards including the 2020
Thuringia Innovation Prize.

1–160
mm

HiFocus’s hi-tech cutting system mixes
different plasma gases to cut various widths
from 1mm to 160mm.
The cutting process starts with a pilot arc ignited between nozzle and cathodeby high-voltage electricity. It partly ionizes the atoms between the plasma torch
and the metal. As soon as the pilot arc touches the material, the electric circuit
closes and the main arc is ignited by the increased power. The advantages are highcutting speeds, cut quality and keeping the heat-affected zone to a minimum.
Kjellberg’s system cuts out the need for reworking and promises longer cathodelifespans. Different mixes of plasma gases tailor the system’s performance tovarious widths from one to 160 millimeters.
www.kjellberg.de/en/start.html

www.spaceoptix.de/

SOIL SAMPLING IN THE FIELD

TRIPOD-SHAPED TURBINES OF TOMORROW?

Measurement system helps farmers cut corners and costs

New wind turbine enables higher altitude operations
A 92-year-old retired mechanical engineer from Leipzig in Saxony has designed
a novel wind turbine that experts say could generate up to 200 percent more
electricity than conventional ones.
The most striking difference is that the turbine is mounted atop a tripod rather
than a pillar. Furthermore, instead of having a single generator in the nacellebehind the hub and blades, Horst Bendix’s design has multiple ones in the base.
That makes his turbine more stable, allowing it to operate at higher elevations
where wind speeds are greater and more constant. The idea is patented andBendix hopes a full-scale prototype will be built.

Farmers’ lives may be about to get a bit easier. The Stenon company from Potsdam in
Brandenburg state has developed a system called FarmLab for carrying out soil analysis
without having to send samples to a laboratory. The field device takes thousands ofmeasurements including nitrogen, phosphorus, potassium, carbon and magnesium
levels as well as parameters like temperature, moisture, pH value, soil type and texture.
The system uses GPS and is networked, so that farmers can get fertilizer recommendations and field maps for application. FarmLab will cut costly laboratory analysis
out of the loop and optimize fertilizer use. “The product serves the real needs ofthe farmer and solves real challenges facing their land,” says Daniel Töppe, deputy
chairman of the executive board of the farmers’ association in the Brandenburg
community of Groß Machnow.
www.stenon.io/en/

Photo: SPRIND GmbH

Photo: Stenon GmbHwww.sprind.org/en/projects/bendix/

Retired engineer Horst Bendix has designed taller, tripod-based turbines foruse in the highest wind-speed areas.

22

MARKETS GERMANY | Medical Industry

CUSTOMIZING
Cancer Treatments
Germany’s single-cell biotechnology sector is transforming cancer treatments
by shining a light on the genetic activity of individual cells. It’s also advancing
our understanding of how our immune defences respond to Covid-19.

THE BOTTOM LINET

he Max Delbrück Center for Molecular Medicine (MDC) in Berlin is
one of the many research institutions
around Germany that is fighting the good fightagainst humanity’s deadliest diseases. And oneof the scientists on the frontline is PhD student
Matthias Jürgen Schmitt, who was honored lastyear for his contribution to cancer research by
the Berlin Cancer Society. He used single-cell
analysis to investigate why glioblastoma – thedeadliest brain tumor of all – becomes resistant
to treatments.
“We were able to see that there are manydifferent cell types at different stages, and thata one-size-fits-all treatment is not possible,”
explained Schmitt, a researcher from MDC’s
Molecular Oncology lab, in a press release.
As the name suggests, single-cell sequencing (SCS) is a branch of biology that focuseson individual cells, a technique that yields
different results from research conducted oncells en masse or biopsies of entire tumors.
It allows doctors to monitor patient healthby using sophisticated biochemical readings
from blood and other tissues. These so-calledbiomarkers help clinicians detect diseases at
an early stage, make accurate diagnoses andchart the progress of treatments.
Research in the field is booming in Germany – which accounts for more than 10 percent

Single-cell analysis is one of themost exciting areas of recent
biomedical research and something of a German specialty.
International companies aretaking advantage of Germany’s
expertise and access to Europe’s
largest healthcare market.

of all publications relating to single-cell technology. And that’s good news for sufferers of
everything from cancer to Covid.
No more one-size-fits-all
The relatively young field of single-cell genomics has seen a number of advances in recent
years. The journal Nature Methods selected
SCS as Method of the Year in 2013; and in 2018,­Science chose single-cell analyses of gene activity over time as its 2018 Breakthrough of the Year.
Along with the MDC, the Fraunhofer Institute for Toxicology and Experimental Medicine
and the Berlin Institute of Health at the Charité(BIH) are active players in the field in Germany, as are companies such as Darmstadt-based
Merck, QIAGEN in Hilden, CeGaT in Tübingen
and Jena-based ALS Automated Lab Solutions.
Merck and QIAGEN are active in the development of liquid biopsies, which are transforming cancer diagnostics and treatments.
Instead of using tissue samples, liquid biopsies

test blood for cancer cells or DNA particles
from tumor cells.
“We are moving away from the era of chemotherapy where everybody gets the standard
treatment and some will benefit, but the majority will not, while still experiencing its side
effects,” says Professor Ilhan Celik MD, seniorprogram lead of global clinical development
at Merck. “With liquid biopsies, we also cananalyze hundreds of molecular biomarkers
within a single patient sample – each one apotential signal that can help answer importantquestions.”
Not just for cancer
The benefits of single-cell analysis aren’t restricted to cancer. It has also become essential
to our understanding of the Sars-CoV-2 virus,
in particular why children’s immune systems
are better at limiting the effects of Covid-19
than adults’.
In a highly respected recent study, researchers at the BIH and the German Cancer
Research Center (DKFZ) used single-cell sequencing to examine nearly 270,000 cells from42 children and 44 adults. Their findings could
help protect adults against the virus.
“If we could generate the immune response
already present in children in a controlled manner in adults, this would provide increased pro-

MARKETS GERMANY | Medical Industry

SINGLE-CELL SCIENCE:
MULTIPLE
APPLICATIONSSingle-cell research is transforming the diagnosis and treatmentof various types of cancer and also aiding scientists in developing therapeutics against diseases like Covid-19. The growing
number of applications using single-cell technology include:

LIQUID BIOPSIES… which are used to test blood rather thantissue samples for cancer cells

DETAILED STUDIES… of malignant brain tumors to improvetherapies

SEQUENCING OF BIOPSIES… of advanced, non-small cell lung cancer(NSCLC) to further individualize treatment

INSIGHTS INTO SARS-COV-2… possibly leading to greater protection
against the virus and boosting our understanding of how the body reacts to infection

tection against coronavirus,” says Professor
Irina Lehmann of the BIH. “We are alreadythinking about how this could be done.”
Researchers are looking at the possible development of a nasal spray that could stimulate the immune system in the nose, she adds.
Another area in the field of single-cell researchthat has also become crucial in understanding
Covid-19 is “omics” – an emerging multi-disci-

plinary and rapidly evolving field. Multi-omics
research collects and combines data on several
molecular levels.
The German Covid-19 Omics Initiative (DeCOI) is a national network founded in 2020 thatinvolves scientists from more than 40 universities, organizations and research institutions
using omics data based on next-generation
sequencing in Covid-19 research. SCS is pro-viding promising insights into the complex
processes that take place in the bodies of people
infected with the virus and contributing to thedevelopment of new treatment possibilities.
“A completely new dimension“
The economic potential of single-cell technology in the field of biology and medicine is plain
to see. Germany is Europe’s largest healthcare
market, and around 500,000 people in the
country develop malignant tumors every year.
Foreign companies are taking notice. The
Chinese firm Singleron Biotechnologies recently established a new lab in Cologne in addition
to its facilities in China and North America. The
fast-growing company develops high-throughput single-cell multi-omics platform productswith a focus on clinical applications. Singleroncurrently provides products and services toabout 300 hospitals, research institutes andpharmaceutical companies.
“Single-cell analysis has brought a completely new dimension to research, diagnosis,
and treatment of human diseases,” says CEO
and cofounder Nan Fang. “Complex diseases
such as cancer and immune system disorders
can only be accurately deciphered if measured
at single-cell resolution. At Singleron, we are focused on developing single-cell analysis products and solutions for clinical applications.”
With its new German location, Singleronis aiming to establish partnerships in Europe
and promote its services and products. One ofthose new partners is the laboratory for Translational Molecular Pathology at the University
Hospital Cologne, which recently collaborated
with Singleron on single-cell sequencing ofadvanced non-small cell lung cancer (NSCLC).
“We receive many inquiries about biotechnology in Germany, especially in regard
to personalized medicine and oncology,” confirms Marcus Schmidt, director of Chemicals
and Health at Germany Trade & Invest. “We
are happy to assist international companies
interested in expanding their R&D activities
in this field.”

CONTACT
gregor.kemper@gtai.com
GTAI expert for healthcare
www.gtai.com/medical-biotech

23

24

MARKETS GERMANY | Information Technology

This year, construction begins
on the site of AI Innovation Park
Baden-Württemberg in Heilbronn.
The world-class artificial intelligence hub is funded by the state.

Photo: Manuel Schönfeld – stock.adobe.com

INTELLIGENT SOLUTIONS FROM THE SOUTH

HEILBRONNBADEN-WÜRTTEMBERG

In July 2021, the champagne corks were popping
in Heilbronn. The southwestern German city wasawarded the state project AI INNOVATION PARKBADEN-WÜRTTEMBERG. A state-of-the-art AI
campus will be built on a 23-hectare site in the southof the city by 2026, with the goal of establishingan ideal AI ecosystem. It will include an innovation
center for start-ups with coworking spaces and arange of services and advice for corporate development. A Gaia-X data center will supply the necessary
networking and computing power on the new campus. The consortium behind the project is investingaround EUR 70 million, with another EUR 50 million
coming from the regional state of Baden-Württemberg. Heilbronn University of Applied Sciences,which began offering AI courses last year, is also
supporting the project. The campus hopes to attract
both national and international companies, start-ups,
research institutions and investors by creating an
optimal environment for innovation in the field.

GROWING INTEREST IN AI
Percentage of companies in Germany that have invested orwant to invest in AI

Have invested

5930Interested/will invest
No plans/have not invested yet

8
Source: Bitkom, April 2021

€ 5 BN
Amount the German g­ overnment is investing between 2018and 2025 to make the country a competitive location for
AI technology
Source: BMBFMARKETS GERMANY | Information Technology

AI Made in Germany
Experts agree that artificial intelligence (AI) will be one of the major technologies ofthe future. But AI is no longer just something from Silicon Valley. Germany is emerging
as the ideal location for providers in Europe.

How much maternity leave am I
entitled to? And how do I apply for
it? These are the kind of questions
employees at multinational conglomerate Siemens entrust to Carl. The friendly chatbot, who
speaks five languages, answers their most important HR questions around the clock. And
if he doesn’t know the answer, he helpfully
provides an internal contact who might.
Nowhere is Carl more popular than in HR,
since he saves his human colleagues hours oftime answering standard inquiries. That’s why
he is used worldwide. Carl was developed in
Munich by IBM, which operates its own artificial intelligence (AI) development center
there. In 2017, the US company invested around
EUR 200 million in the IBM Watson Center
Munich to develop tailor-made AI solutions
for customers.
Chatbot Carl is just one example of how AI
can make day-to-day life in companies easier.
The areas of application for AI technologies are
becoming more diverse by the hour. From HR toinventory to assembly lines, many companies
already rely on AI to get run-of-the-mill jobs
done. Germany is a pioneer in this burgeoning
field – in terms of both innovative AI providers
and demand from large manufacturers.
The advantage of strict standards
In April 2021, Germany’s digital trade association Bitkom surveyed more than 600 companies
about the current and future use of AI technology. While only around 8 percent of companies inGermany were using AI at the time, the trend is
an upward one. More than two-thirds of German
companies surveyed said that AI is the mostimportant technology of the future. And the
proportion of companies that are actively planning to use it, or discussing deployment, hasrisen by eight percentage points to 30 percent.

THE BOTTOM LINE
From HR to assembly line, thepossibilities of AI are almost
endless. Germany offers numerous advantages to foreigncompanies as a location for AI
development and sales.

Germany is an extremely attractive location
for foreign AI companies right now, says Wolfgang Rodler, head of the IBM Client Center in
Munich. The main selling point is proximity
to a large number of potential customers, asevidenced by IBM’s portfolio. As well as Siemens, the company has provided solutions
for the German Aerospace Center. On average,
the IBM Client Center welcomes 500 groups ofpotential new clients a year.
Several universities are deeply involved
in künstliche Intelligenz (KI), as it’s called inGermany, and the academic scene supports theprivate sector, not only with research cooperation but also by turning out highly employable
IT talent.
“There is hardly any other area that relies
as heavily on company data as AI,” explains
Rodler. “The technology only works properlyin the extended application.”
The legal and political framework in Germany also supports the entry of AI companies
into the wider market. The country’s strict dataprotection regulations are actually more of ahelp than a hindrance for developers, argues
Rodler, because it means AI developed in Germany will fulfill or exceed the standards ofalmost every other country in the world.

“Removing a data backup solution from a product because it is not needed in a country ismuch easier than adding a new technology,”
Rodler says.
Useful ecosystems
Vera Demary from the economic research institute IW underlines a fourth advantage: German
entrepreneurship.
“There is a lively start-up scene in Germany, for example in Berlin, Munich or in the
Ruhr area, where foreign AI developers willfind functioning ecosystems and can quickly
join networks,” she says. “Local AI start-ups
know the market. They know about computing
or research centers, and they know the funding landscape. Foreign companies can quickly
establish contact with customers, associations
or authorities.”
Germany’s Ministry of Education andResearch is doing its part to ensure that thecountry continues to develop as a premium AI
sales and development location. In September
2021, the ministry announced a huge fund forthe construction of AI service centers that doles
out up to EUR 10 million per project.
These new computing power centers will
support research institutions and private enterprises to develop intelligent, self-learning
software and integrate it into their projects.
Overseas companies setting up shop in Germany can use these data centers and avoid thesubstantial upfront costs of having to invest in
their own digital infrastructure.

CONTACTasha-maria.sharma@gtai.com
GTAI expert for AI
www.gtai.com/Industrie4.0

25

26

MARKETS GERMANY | Information Technology

LESSONS LEARNED
from a Pandemic
Coronavirus restrictions have provided a huge boost to the digital learning sector in Germany,shaking the country out of its traditional approach to education. Online learning companies
can now benefit from a range of government programs.

L

EARNTEC is Germany’s main trade
show for education solutions and theplace to be for innovators and decision-makers. One of the exhibitors at the latest
show, which took place in Karlsruhe in February, was eSquirrel. The Austria-based company
offers a learning portal and a quiz app thatmatch textbooks and learning materials all theway from the second grade up to university, as
well as providing tools for companies.
eSquirrel entered the German market in2019 by digitizing schoolbooks by publishers
Cornelsen and Klett. Now it plans to set up a
German subsidiary. “Germany has all along
been the logical extension of our home market,
and the German educational sector’s relatively
sluggish pace of digitalization translates into
additional opportunities for our innovative
solutions,” says Michael Maurer, eSquirrel’s
cofounder. “A range of government programs
is gaining momentum and so is LEARNTEC,
as our professional audience is keenly awareof all the remaining challenges.”
Funding German education
Germany has one of the best-funded educational
systems in the world. National, regional andlocal governments allocated a preliminary EUR
158.6 billion for education in 2020, up 5.3 percent
from the previous year. If private education plus
science and research spending is included in
the calculation, that number is far higher: EUR
325.6 billion in 2019, up 4.4 percent year-on-year.
The Digital Pact for Schools is one of a long
list of national programs designed to bring Ger-man schools into the digital age. It allocates
EUR 6.5 billion over a period of five years tobring learning infrastructure up to date.
It’s bolstered by the Post-Covid Action Program for Children and Young People, which allocates EUR 2 billion for 2021 and 2022, including
EUR 1 billion for after-school tutoring and EUR
1 billion for early childhood education, sports,
leisure and vacation activities, and support forchildren and teenagers in their everyday lives.

THE BOTTOM LINEThe Covid-19 pandemic taught
Germany that education needs
to go digital. The government
has responded with a variety of
programs that make e-learning
an exciting market for smart
foreign investors.
There’s also the 630-million-euro fund for the
National Education Platform. Running until
2025, it aims to better integrate Germany’s
countless regional educational programs intoa single national platform for digital access toinnovative learning and teaching formats. Some
EUR 150 million of this fund is earmarked forcompanies, universities and project consortiums that develop solutions.
Learning new tricks
The National Education Platform was motivated by the recognition that the country’s

decentralized, regional educational policies
were ill-equipped to tackle the challenges
that arose during the corona pandemic andcontinue to affect students.
eSquirrel’s Maurer points out that concerted private sector efforts, such as the Alliancefor Education (Bündnis für Bildung), have given additional momentum to digital learningin Germany. The alliance brings together awide variety of stakeholders, from establishedschoolbook publishers and educational technology start-ups to international IT conglomerates including Samsung and Microsoft. “Ourmembership in the Alliance for Education andour participation in LEARNTEC bring us closer to the decision-makers here in Germany,”
Maurer says. “And by opening our first German
office later this year, we will also be able toreact faster to public tenders.”
Industry expert Johannes Fischer confirmsthat politicians across the spectrum are awarethat there is much left to be done. Innovative
solutions are urgently needed not only forschools but also for universities and corporate training. “We see that some countries
are ahead of us in terms of digital learning,”
he says. “And we are very receptive to foreigncompanies that come here with new ideas tohelp us upgrade our solutions.”

ONLINEwww.gtai.com/e-learning

MARKETS GERMANY | Information Technology

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27

28

MARKETS GERMANY | Manufacturing

MECHANICAL
Servants
Good help can be hard to find, as many businesses discovered in 2021.
Service robots are increasingly being adopted in countries where wages
are high and labor shortages threaten many economic sectors.

4
GROWING NICHES FORSERVICE ROBOTS

1

Transportation and logistics:
Germany’s manufacturing processes
are highly automated but intra-factory
logistics still aren’t.

2

Professional cleaning:
Industrial cleaning still relies on humanbeings but demographics are making
recruitment difficult.

3

Medical robotics:
Robotic surgery devices, the most expensive type of service robot, are inincreasing demand.

4

Hospitality:
The corona pandemic has put a premium on maintaining distance between
staff members and minimizing theircontact with food.
Sources: IFR; MiR; UR

MARKETS GERMANY | Manufacturing»It is obvious that the­demand for our solutions
is only going to grow inGermany.«Jörg Faber, MiR’s sales director for DACH and Benelux

S

hielded from its surroundings by aplexiglass cube, a robotic arm pours
chopped spring onions into a wok andplunges a basket of Thai noodles into boiling

Photo: DaVinci Kitchen GmbHwater. Right next to the robotic cook, a display
explains the dish, and once the bowl is ready, it
is passed to the buyer through a flap opening.
No money changes hands. Orders are placed
and paid for by smartphone.
Service robots like the cooking booth developed by Leipzig-based start-up ­DaVinci
Kitchen and powered by Denmark-based
Universal Robots have a bright future in Germany. Mechanical help is especially needed inhigh-wage countries, where virtually all partsof the service sector are suffering from labor
shortages that can only get worse given unfavorable demographics.
Good prospects for service bots
According to the International Federation of
Robotics (IFR), the sector blossomed globallyin 2020, with the number of new professionaland consumer service robots increasing by
131,800 and 19 million units, respectively.
That translates into 41 percent and 6 percent
growth, easily outpacing the figures for industrial robots.
The definitions of industrial robots and service robots aren’t clear-cut, but the IFR defines
the former as being used in industrial automation applications, while service robots encompass everything but industrial applications.
“In 2020, the pandemic pushed service robot
demand in Germany, as local manufacturers
further automatized intra-logistics that bring
inputs to production equipment and outputs
to inventories, while e-commerce warehouses
deployed more AMRs (autonomous mobile robots) to reduce the number of people exposed
to risk of infection,” says IFR’s general secretary Susanne Bieller. “Another strong rationale
for employing AMRs is that they can adjust

easily to changes of production patterns since
they can cope with alternative surroundings,
unlike conventional intra-logistic equipmentthat either needs fixed tracks in the floors or
antenna-affiliated infrastructure.”
Cleaning up in higher-wage countries
Bieller also points out that Germany’s highwage level translates into buyers enjoying amuch quicker amortization for robot purchases
than would be the case in low-wage countries.
And the high density of industrial robots inthe country suggests that there will be strong
future demand for service robots. “Companies

THE BOTTOM LINEAs demographic shifts andeconomic circumstances make itharder for companies to source
routine labor, demand for service
robots is booming. Companies
bringing solutions to Germany
can expect tidy profits.

that have already automated their manufacturing processes are much likelier than others toinvest in organizing their intra-logistics with
AMRs,” Bieller says.
On the list of international robot-makers
expanding their presence in Germany is Denmark-based Mobile Industrial Robots (MiR),
which in late 2019 opened an office in the western German town of Eschborn for distribution
and support in German-speaking Europe andthe Benelux region. It also set up a demonstration and training center. MiR currently employsnine people in Eschborn and plans to expand
its workforce in the coming years.
MiR’s transport robots are deployed for use
in hospital sterile centers, where they load racks

with unclean instruments and then send themto disinfectant washers. Among the other intriguing areas of application are electronics
manufacturers’ clean rooms, where robots reduce the risk of contamination through dust
and human hair. “Germany is a country witha lot of highly automatized manufacturing ofcars, food, cosmetics and electronics, but allthese sectors struggle to recruit people willingto toil away in intra-factory logistics,” says Jörg
Faber, MiR’s sales director for German-speaking
Europe and Benelux. “It is obvious that demandfor our solutions in Germany is only to grow.”
A universal product
Meanwhile, DaVinci Kitchen is expected to
go on the market in 2022. Andrea Alboni,
Universal Robots’ General Manager Western
Europe, projected that it will be a hot-seller
among owners of canteens, for instance, intrain stations or companies. Universal Robots
sells its cobots (robots that work together withhumans) to sectors ranging from food processing and electronics to machine-builders andscience and research.
Universal Robots currently employs about
30 people in Munich and has expanded its
workforce by 30 percent annually since establishing its office in the Bavarian capital in 2015.
“Our steady progress in improving interface
between humans and robots allows us to serve
many of the small and mid-size enterprises that
had previously regarded robots as unaffordable
and too complex,” Alboni says. “Germany has
played a key role in our company’s development all along, and we expect that to continue.”

CONTACT
peggy.goerlitz@gtai.com
GTAI expert for robotics
www.gtai.com/machinery-­equipment29

30

MARKETS GERMANY | Start-ups

HERD Mentality
More and more German start-ups are achieving one-billion-dollar-plus unicorn status.
The global boom in venture capital investment is reshaping the start-up landscape inGermany and could even reconfigure Europe’s largest economy as a whole.

In mythology, unicorns are elusive
creatures. In business these days, they

are anything but. Take, for example,
Munich’s process-mining start-up Celonis.
When the company, which was founded in2011, achieved its EUR 1 billion valuationin 2018, the business newspaper Handelsblatt still described German unicorns as a“rare sight.”
Fast forward just three years to June 2021,
and Celonis took in USD 1 billion in fresh capital in a single round of funding. That made ita “decacorn” – a company valued at over USD
10 billion.
Henry Ellenbogen, chief investment officer at America’s Durable Capital Partners, described the Celonis model as having “a massive
market potential to create a new and modern
way to run your business.” But a great businessmodel is only one part of the equation. The
increased availability of venture capital (VC)
and a long-term shift in the German economy
are two others.
The number of German start-ups valued
at USD 1 billion or more is rising exponentially. In late 2021, the venture capital databasefirm consultants CB Insights put the numberof German unicorns at over 20 and growing.
More than half of the companies concerned
achieved that status last year alone.
One of them was Contentful, a Berlinsoftware provider whose innovative and user-friendly digital content platform is now
used by nearly one in three companies in the
Fortune 500 stock index. In July 2021, the firmraised USD 175 million from foreign investors.
Reimagining the German economy
According to a study by consulting firm EY,
EUR 17.4 billion flowed into German startups in 2021. That was more than three times
as much as in 2020 – or a percentage rise of
229 percent.

THE BOTTOM LINE
Germany has greatly benefited
from the global explosion in VC
investment and last year produced a record number of unicorns. Entrepreneurs weighing
up their location options shouldtake a long look at the heartof Europe.
And there’s no sign of a slowdown. Consultants McKinsey see the potential for 41,000
new start-ups by 2030, along with 1.4 million
new jobs and a market capitalization of EUR
2.3 trillion. That would be more than the total
worth of Germany’s current blue-chip DAX 40
stock index. At present, around 2,900 start-ups
are founded in Germany every year.
“Technology advancements, particularly inthe areas of digitalization and connectivity, arecompelling Germany to reimagine the fundamentals of its economy,” wrote McKinsey in apaper entitled Entrepreneurship Zeitgeist 2030.
“The widespread conclusion is that a robust
start-up ecosystem – enabled by these technology trends and comprised of founders, theirbusinesses, corporates and SMEs, educational
institutions, investors, and government agencies – needs to become a pillar of the economy
if Germany is to remain prosperous at homeand competitive abroad.”“The ecosystem for start-ups has improved
markedly in the last few years,” says Stefanie
Burgdorff, Germany Trade & Invest’s trend &innovation scouting expert, who is in charge ofinternationalizing Germany’s Digital Hub Initiative. “Young research-oriented companies
in particular are attracting more attention andsupport. Nationwide entrepreneurship programs and network initiatives like the Digital
Hubs have grown in importance and enabledcloser cooperation between start-ups, research
institutions and private companies. Finally,
international success stories like Zalando,
HelloFresh, FlixBus and SoundCloud elicit
admiration far beyond Germany’s borders.”
Future Funds
The German government is also doing its bit.
The centerpiece of state efforts to help Germany catch up with start-up powerhouses like the
US and UK is the 10-billion-euro Future Funds,
designed to trigger massive venture capital
investments. Those monies, combined withother instruments pledged by the last government in March 2021, should provide fledgling
companies with some EUR 50 billion in the
coming years. There is also a 900-million-eurohigh-tech entrepreneurs fund and a one-billion-euro deep tech fund. “Our aim is to foster
the best start-up ecosystem in Europe,” says
Thomas Jarzombek, who until recently was thegovernment’s start-up commissioner.
Germany – and particularly the cities ofBerlin and Munich – is already profiting. In
Berlin, the investment volume more than tripled in 2021 from EUR 3.1 billion to EUR 10.5
billion. And in Bavaria and Munich, the amountof venture capital likewise shot up – going from
EUR 1.5 billion to EUR 4.4 billion.
But Burgdorff suggests that entrepreneurs
searching for the perfect location should also
look beyond the national and Bavarian capitals. “Germany has a decentralized economic
structure with regional specialties. You don’t
have to establish your company in big, often
expensive cities to be successful.”

CONTACT
stefanie.burgdorff@gtai.com
GTAI expert for trend & innovation
scouting
www.gtai.com/startups-germany

MARKETS GERMANY | Start-ups

TOP 10 GERMAN UNICORNS
German unicorns with the highest valuation (in USD billion)

1

6

2

7

3

8

4

9

5

10

CELONIS$ 11BN, MUNICH

OTTO BOCK HEALTHCARE$ 3.5BN, DUDERSTADT

N26$ 9.23BN, BERLINGORILLAS$ 3.1BN, BERLINPERSONIO$ 6.3BN, MUNICH

FLIXMOBILITY$ 3BN, MUNICH

MAMBU$ 5.5BN, BERLINCONTENTFUL$ 3BN, BERLIN

TRADE REPUBLIC$ 5.3BN., BERLIN

FLINK$ 2.85BN, BERLIN

Source: Statista

SECTORS BIRTHING ­UNICORNS
The four German start-up sectors with the largest inflows
in 2021€3.77 BNFINTECH/
INSURTECH€ 3.71BN

E-COMMERCE€3.59 BNSOFTWARE& ANALYTICS€ 1.96 BN
MOBILITY

Source: EY

RECORD-BREAKING ­INVESTMENT
Total amount invested in German start-ups in 2021

5.3

Photo: LIGHTFIELD STUDIOS – stock.adobe.com

BILLION EUROS
IN 2020

17.4
BILLION EUROS
IN 2021

Source: EY

31

Photo: LegalTegrity

32

MARKETS GERMANY | Start-ups

Pia Michel, COO of
LegalTegrity, a legal
services company
which supports SMEs

PLATFORM
for Female Founders
Increasing numbers of women are founding start-ups in Germany and­gender-diverse teams are delivering better returns, but there’s still a long way
to go toward equality. We look at the challenges facing female ­entrepreneurs
and the rewards of backing them.

The figures look promising for womenin business: The latest studies showthat start-ups with female founders
generate more revenue and have a higher return on investment than all-male teams. But
female-led companies still only account for aminor percentage of start-ups and financing,whether that’s in Germany, Europe or the restof the world. Equality is a tough nut to crack.
The German Startup Monitor found thatthe share of women setting up companies in-

THE BOTTOM LINEThe share of women founding start-ups in Germany has
increased, but there’s still a
big gap. More focus on female
entrepreneurship in educationand more women investors areneeded to redress the balance.

creased during the pandemic, from 15.9 percent
in 2019 to 17.7 percent in 2021. While growth isheaded in the right direction, the organization
notes that the conditions for women, particularly women in tech, still could be better.
One excellent role model is Maraja Fistanic, who founded LegalTegrity in Frankfurt in2019 together with her colleagues Thomas
Altenbach and Pia Michel. The company offers a plug-and-play whistleblower service
for medium-sized companies. LegalTegrity

MARKETS GERMANY | Start-ups

Support for female entrepreneurs
Fistanic and her cofounder Michel took partin the Start-up Scale Program, funded by what
was then the Ministry for Economic Affairs andEnergy, which has made supporting female entrepreneurs a top priority. Under the umbrellaof the Digital Hub Initiative, the program was
set up in 2020 to address the start-up gender
gap and offers personalized networking, market strategy and mentoring to five female-led
companies.
“We found that the mentoring and thesessions we had were super-constructive andhelpful,” says Fistanic. “We wanted to figure out
where the quick wins are, and we found them.”
She recognizes that there’s more support today
for fledgling female entrepreneurs. “When I
was finishing school and university, nobody
was talking about founding a company, especially not women,” she says. “Now, there are a
lot of programs connecting with universities
to support that.”
The similarity bias
Bettine Schmitz is the managing director of
Auxxo, Germany’s leading all-female venture
capital (VC) fund. She believes encouraging
more women investors is a big part of closing
the gender funding gap. “We all have similarity
biases – if you see someone like you, it’s easierfor you to get into their head. If someone isdifferent from you, from your gender or ethnic
background, it can be harder,” says Schmitz.
“In venture capital, it’s heightened. Venture isso much about believing in people.”
The statistics back up her theory: VC
companies with female partners are morethan twice as likely to invest in women-led“SEEKING OUTDIVERSITY IS EXTRA
DE-RISKING OF A
HIGH-RISK INVESTMENT.”
Bettine Schmitz is managing director of
Auxxo, Germany’s leading all-female venture capital fund, which invests in early-­
stage European start-ups. She spoke with
Markets Germany about finding and funding women-led start-ups.
How did you and your partners start
Auxxo?
The three of us started doing angel investments
when we all had small children. We wanted toplay the long game rather than aim to cashout quickly, so we created the Female Catalyst
Fund, a co-investment fund exclusively forcompanies with at least one female founder.
We aren’t just looking at start-ups for women –we’re looking for hypergrowth.
Why focus on women?
Historically, there haven’t been many female
investors at any level — few women work inventure capital or operate as business angels.
Many women find it hard to reach partner levelat established VC firms, so they’re setting up
their own funds. Across the board, founders
are trying to solve really big issues. And in Germany, incredible women who have worked inmanagement at hypergrowth companies are
now founding their own start-ups.
Are investors paying more attention tofemale-led companies?
When we started, focusing on female entrepreneurship felt like a token thing. But we’re nota charity. We’re not just investing in femtech.
People are starting to understand that it’s
about potential. We see things from a different angle and are very thorough.
What needs to happen next?
Investment funds have to keep working at
hiring women for senior positions. And funds
need to work harder to court successful womeninterested in VC investing. And female founders
just need to put themselves out there and ask
the question: What’s the biggest possible vision
for what you’re building? Building a company
with 10 people or 2,000 are two very different
things. But if you want to go big, go for it!

enterprises. But women still only account for
10 percent of senior employees in Europe’s
VC firms, reports the online journal Sifted.
According to The State of European Tech 2020,
out of the EUR 38.6 billion raised by European
start-ups in 2020, 90.8 percent of the capital
went to founding teams that were entirely
male, 7.5 percent mixed and just 1.7 percent
all female.
“Everyone believes mixed teams – viewpoints, experiences, genders – is somethingcompanies benefit from, especially when looking at sustainable growth models,” Schmitz
says. “But mixed founding teams remain
underfunded. All of VC is really high-risk, so
seeking out diversity is extra de-risking of ahigh-risk investment.”
Growing interest in femtech
Investors saw an opportunity in a Berlin-based
femtech start-up. Keleya, a platform to help
pregnant and postpartum women access healthand midwifery services, was able to raise EUR
3 million in its Series A round.
“Four years ago, it was much more difficult.
Investors told me I seemed insecure. I’m not ashy person, but that made me think about giving up. I didn’t want to change my personality
just to get funding,” says Keleya’s cofounderand CEO Victoria Engelhardt. “Four years later,
it’s not totally better, but there is a bit moreawareness of this bias.”
The Start-up Scale Program was a perfect
fit for Keleya. “I really liked how they put mein contact with specialized experts based on
the questions we had,” says the CEO. “We hadquestions around branding and market launch,and they put us in touch with experts who did
deep-dive sessions with us.”
Keleya is now poised to launch telehealthconsultations that are covered by public healthinsurance. Engelhardt encourages international investors curious about Germany’s startup scene to come to Germany and meet withreal female founders. “You can’t understand amarket without talking to the players directly,”
she says.

Photo: Patrycia Lukas

is addressing an urgent need: A whistleblower
protection directive that came into effect inDecember 2021 requires EU firms employing
more than 250 staff to offer employees a way toanonymously report violations of the law. But
without a dedicated legal department, compliance presents a substantial challenge for SMEs.
No surprise then that just one year after going
live, LegalTegrity has 60 clients and counting.

33

Sergel’s Square in central Stockholm
is a buzzing commercial and culturalforum. A number of new infrastructure
projects are being built in the vicinity tosupport the capital city’s growth.

Photo: glimpseofsweden – stock.adobe.com“EVERY DEFICIT
MEANS POTENTIAL
FOR BUSINESS...”
Sweden wants to take more of its originative designs
to foreign markets. Germany Trade & Invest’s Sweden
representative Michał Woźniak and Ralph-Georg Tischer,managing director of the German-Swedish Chamber ofCommerce, discuss why Germany is its main focus.
Sweden struck out on its own in not instituting coronavirus lockdowns. Did that pay
off economically?
RALPH-GEORG TISCHER:

Sweden’s “novel
approach” to the pandemic only seems novelto the outsider. Taking responsibility and having faith in common sense is the default wayof handling difficult situations up north. As
for the economic implications, compared toGermany the downturn was much less severe
and recovery will be much faster. But smaller
countries in general seemed to navigate thepandemic better. Of course, the highly globalized Swedish economy also suffers fromthe worldwide repercussions, be it supply
chain issues or travel restrictions. Yet, local
businesses and especially the service sector
benefited from the lack of lockdowns.

is to the varying economic structures among
the three countries.

What are their biggest concerns and hurdles when investing in Germany?

What image do Swedes have of Germany
as a business location and what motivatesthem to invest here?

TISCHER: The ICT sector is a good example.
With regards to digitalization, Sweden is among
the world leaders, whereas Germany has upward potential. And that’s exactly the Swedish
approach – every deficit means potential forbusiness. If digitalization is not at the highest
level, there’s a big market for digital solutions. If
there are slightly different rules and conditions
between Germany’s 16 regional states, you canstart with one instead of trying to take over thebiggest European market all at once. Swedes
know that success is only a matter of having
the right people to navigate. That’s something
we can help with.

TISCHER: Size and potential – that’s what the
majority of Swedish businesses associate with
the German market and what attracts them.
Due to the common market, the EU tends to be
the first step in Swedish expansion. And after
Brexit, Germany is more than ever the prime
destination within it. Swedish investors often
aim to scale up their businesses on the German market. They appreciate the abundanceof potential partners with global activities they
piggyback upon to reach the world market.

Which sectors invest in Germany the most?

CONTACTWOŹNIAK: In the past six years, the main
drivers of Swedish FDIs in Germany wereservice activities and retail. They were largely focused around traditional industries,
like fashion and other consumer goods, aswell as machinery. But almost one-third of
Swedish investment projects in Germany
between 2015 and 2020 were initiated by the
ICT sector.

michal.wozniak@gtai.de
GTAI director Stockholm

MICHAŁ WOŹNIAK:

I’d argue this is also the
only differentiator compared to our Scandinavian neighbors. Although Denmark and Norway implemented much tougher restrictions,
their economies fared more or less equally wellthrough the pandemic. Their GDPs recordedslightly smaller drops than Sweden but will
most likely also recover at a somewhat slower
pace. This isn’t, however, as much a testimony
to the effects of different corona strategies as it

CONTACT
Ralph-Georg Tischer
info@handelskammer.se
managing director GermanSwedish Chamber of Commerce(AHK)

How Germany Works
THE FEDERAL SYSTEMThe Federal Republic of Germany,
like the US, is a confederation ofregional states – there are 16 in total.
It is also a parliamentary democracy with a separation of powers
between the legislative, executive
and judicial branches. Germans

elect their central legislative body,the Bundestag, in national elections
that are usually held every four
years. Parliamentary seats (currently 736) are distributed proportionally to all the major parties based on
their share of the vote. The otherparliamentary body, the Bundesrat,
consists of representatives from all
16 states and has the power to ratify
or vote down certain bills proposedby the Bundestag. Single-party and,more typically, coalition majorities
in the Bundestag elect the execu-

tive – the German chancellor. He or
she then appoints cabinet ministers
to form the national government.
The Bundestag is also responsible
for naming the judges on Germany’s highest judicial body, the Constitutional Court.

CURRENT COMPOSITION OF THE BUNDESTAG
Germany’s current three-party coalition brings together the center-left Social Democrats(SPD), the environmentalist Greens and the business-friendly Free Democrats (FDP) in a
majority national government with 416 parliamentary seats.
The Greens
118 seats

Free Democratic Party
FDP 92 seats

Social Democratic Party
SPD 206 seats

EXECUTIVE

Chancellor, Chancellor’s Office,government ministries

Christian Democratic
Union CDU 152 seats

Christian Social UnionCSU 45 seats

South Schleswig Voters’
Association, SSW 1 seat

The Left
39 seats

Alternative for Germany
AfD 80 seats

736

With 416 seats, the SPD, Greens and FDP have a clear majority.
4 seats are occupied by representatives not aligned with aparliamentary group.

LEGISLATIVE

Bundestag, Bundesrat

Source: Der Bundeswahlleiter

CURRENT COMPOSITION OF THE BUNDESRATThe Bundesrat reflects the parties in power in Germany’s 16 regional states. It has
69 seats: 35 are therefore needed for an absolute majority, which is usually required forlegislation needing Bundesrat approval.

69
35
Total seats

BadenWürttemberg

6

Absolute majority
Bavaria

6

Berlin4
4Brandenburg

4
3

4

Bremen

3

4
3

6

4

Thuringia

4

SchleswigHolstein
Saxony-Anhalt

SaxonySaarlandRhineland-Pfalz

5
Hamburg
3
6
North Rhine-Westphalia
HessenMecklenburg Lower Saxony-Vorpommern

Source: Bundesrat

CDU

SPD

The Greens

The Left

FDP

CSU

JUDICIAL

Constitutional Court, regional courts

Free Voters (Bavaria)

76.6 %
eligible voter participation in the2021 German National Election

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