Insights into Europe’s Biggest Economy 2 / 22

GERMANYDIGITALIZINGDEUTSCHLAND

The four pillars of excellent
research & innovation

Page 14

Page 22Mega

Why Germany’s chemicalindustry needs green H2

In
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GERMANY’S
R&D LANDSCAPE

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GOOD
CHEMISTRYFabGermany’s digital quantum leap is a priority for the
new coalition government – and international companies are invited to help jump-start the future.

Photo: Illing & Vossbeck Fotografie

FOCUS

GERMANY'S DIGITALQUANTUM LEAP
As Germany pledges to “close the digital gap” with arange of investment incentives, multiple opportunities
are opening up for international providers of smart
digital solutions.
pages 4–11

CHEMICAL INDUSTRY»Germany’s new
government ismaking digitalizationa priority.«

ARTIFICIAL INTELLIGENCE

Dear Reader,
Regrettably, as I write these words, war is goingon in Europe following Russia’s brutal attack on

Chemical Reaction

Smart Logistics

Germany’s large chemical industry needs to cut
emissions. Green H2 could provide the solution.

The German market is hotting up for providersof AI- and IoT-based logistical solutions.

page 14page 20

START-UPS

MORE ARTICLES IN THIS ISSUE:

Fintech’s
Female Side

Magdeburg’s “Mega Fab”: Interview with Intel
Germany’s MD Christin Eisenschmid .......... page 12

German women are flocking to fintech
services – start-ups with a female focus
will benefit.
page 32____ The Digital Magazine
Online at:Greentech’s Growth Spurt: Why Germany’senvironmental tech sector is booming ........ page 18
Outside the Ivory Towers: Germany’s excellent
research landscape and how it works ....... page 22
Germany’s New Funding Map: GTAI’s Finance& Incentives expert follows the money .... page 26
Venture Capital Berlin: Why international
funds are moving to Germany’s capital . page 28

www.marketsgermany.com

Passion Never Fails: Foreign entrepreneurs
talk about founding in Germany ........... page 30

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Ukraine. Thousands of deaths, millions of refugees
and endless sorrow are the tragic consequences.
The German government and everyone here atGermany Trade & Invest (GTAI) absolutely condemn this sort of violence. We sincerely hope fora swift end to hostilities and for the restoration ofpeace in the region – not least because international cooperation is the key to mutual security,prosperity and happiness.
This issue of Markets Germany is full of examples of people and businesses working together
across national lines. March 15, 2022, for instance,
will go down as a great day for the German economy with the announcement of not one but two
giant, billion-euro international business investments: Northvolt’s selection of Heide as a site forits new gigafactory and Intel’s decision to create a“mega fab” facility in Magdeburg to manufacture
semiconductor devices. We are delighted to bring
you an interview with the managing director, VP
and general manager of Intel Germany, Christin
Eisenschmid, in which she talks about why Intelpicked Germany.
Our lead story concentrates on digitalization.
This is often perceived as a German shortcoming, which is why Germany’s new government ismaking it a priority. It’s a sector that offers great
opportunities for international companies. So wehope this issue of Markets gives you some ideas
about how you could work with and in Europe’s
largest economy to help shape a common future.
Dr. Robert Hermann, CEO
Email: invest@gtai.com

Photo: Reddit

MAJOR PLAYER: STEVE “SPEZ” HUFFMAN
Steve Huffman, aka “spez,” is one of the mostsuccessful web developers and entrepreneursin the world. In 2005, he cofounded the USbased social news aggregation platform Reddit, which came in at number 18 in the Top
Websites Ranking by data provider Similarweb in December 2021.
Steve Huffman, who has been serving
as Reddit’s CEO since 2015, is very keen
on boosting the platform’s internationalreach. And following the launch of overseas branches in the UK, Canada andAustralia, Reddit decided to open its first
office in a non-English-speaking economy
in the central Berlin district of Mitte in
October 2021.

“Our launch in Germany is the first step ina long-term commitment to the market andexpansion beyond English-speaking countries,” Huffman says. “We’re excited to build
our local workforce, grow more German communities and enable German advertisers toconnect with our users.”
Reddit primarily generates revenue
through the sale of advertising, and thanks
to 47 percent annual growth Germany already represents its fifth largest user base.
International and German advertisers likeIntel, Qualcomm, HP, Amazon, Apple, Aktien.news and Deutsche Telekom are among
those already working with the Berlin-based
sales team to engage local communities.

Quick facts
NAME

Steve Huffman

JOB TITLECEONATIONALITYUSQUALIFICATION

BS in Computer Science

COMPANY NAME

Reddit

LINK

www.reddit.com/r/de/

LOCATION

San Francisco

INDUSTRY

Social media

BERLIN OFFICE

Community, sales,
operations, productand engineeringMARKETS GERMANY | Focus

DIGITALIZINGDEUTSCHLAND
Germany’s digital transformation has lagged behind some of its European neighbors in recent years. The new coalition government has made it a priority tochange this, offering innovative digital solutions providers a competitive edge.

A

hmad Sharaf chose a complicatedtime to set up a business in Germany. As the second wave of the coronavirus pandemic took hold in the fall of 2020,the 38-year-old Egyptian engineer spotted aunique opportunity to start a small softwaredevelopment company offering artificial-intelligence-based language solutions for two separate, geographically distant client bases. And so
DeepSource was born – simultaneously serving
companies in the Middle East as well as Europe.

THE BOTTOM LINE
Germany’s new coalition government wants to “close the digitalgap” with neighboring economies. That will add dynamism to
the German market and createlots of opportunities for international companies providing
smart digital solutions.

“Germany has long been a hub for advanced
tech, including artificial intelligence,” says
Sharaf, who had previously worked for major
companies in Ireland and Saudi Arabia. “On
the other hand, the pandemic paved the way
for European companies to take advantageof remote talents as never before. Plus, Germany is the biggest economy in Europe, andwe wanted to be in Europe. So we decided:
Let’s go for Germany.”

THE FIVE FIELDS OF ACTION IN THE GERMAN GOVERNMENT’S DIGITAL STRATEGYThe “all-encompassing digital revolution” being pursued by the government covers all
aspects of the German economy, society and state administration.

DIGITAL
EXPERTISE

INFRASTRUCTURE
AND FACILITIESINNOVATION IN
INDUSTRY

SOCIAL TRANSFORMATION

MODERN
GOVERNMENT

Investing in people’s skills –from kindergarten to
retirement

Gigabit-capable networks
for cities and rural areas

Broad cross-sector promotion of digital networking
of industry

Higher quality of life
thanks to a range of digitaltools

All administrative services
to become digital

Photo: Stefan Finger/laif4

DIGITALIZINGHEALTHCAREAt the University Hospital of Essen,eight-­year-old Marko undergoes an
MRI examination with the help of a
VR headset to ease his fears about theprocedure.

6

MARKETS GERMANY | Focus

DIGITALIZING ADMINISTRATION
A map showing reported Covid-19 infections in Berlin’s Mitte
district on January 22, 2021. It was automatically generated by acomputer at the Berlin Mitte Health Department in the Moabit
Health and Social Center (GSZM).

Germany is keen to bring about many morestories like Sharaf’s. The new government’s
coalition agreement between Chancellor Olaf
Scholz’s Social Democrats (SPD), the Greens,and the Free Democratic Party (FDP) includes
a comprehensive digitalization drive that will
create even better opportunities for entrepreneurs like Sharaf and their investors.
DeepSource is still operating on a small
scale, but it has already worked on several successful projects with its international teams,
made up of software developers mostly basedin the Arab world. One of DeepSource’s key
projects is an advanced Arabic conversational
artificial intelligence (AI) solution with chatand voice bots. Known as Natural Language
Processing (NLP), the technology enables
computers to process, analyze and seamlesslyinteract with human languages.
Digital solutions tobureaucratic problems
Although the opportunities for Sharaf in Germany were very appealing, the founder did
encounter a few hurdles along the way – themain one being the high level of bureaucracyneeded to start a German limited company(GmbH).
“One of my friends founded a company
in the UK, and he told me a company could

be founded in only 30 minutes there, all completed online,” he says. “But for me it took two
weeks – I had to go to a notary, sign in front of
him and find a translator. They need everythingon paper.”Sharaf’s experience sounds all too familiar
to another, much larger company in a similarly
dynamic sector of the German digital economy.
Qonto is a unicorn – a start-up worth more thana billion dollars. Now valued at EUR 4.4 billion,
the French fintech provides business accounts
for some 220,000 companies of all sizes in four
countries: France, Italy, Spain and Germany.
Around a third of Qonto’s new clients arefounders of new companies, and it’s often a

MARKETS GERMANY | Focus

GERMANY’SNEW COALITION
GOVERNMENTThe new German government is a three-way coalition of the Social
Democratic Party (SPD), the Green Party and the Free Democratic Party(FDP), led by SPD Chancellor Olaf Scholz. It is broadly center-left in outlook, with a strong focus – thanks partly to the presence of the free-market-friendly FDP – on modernizing the German economy.

Photo: Andreas Pein/laifIndeed, the man with his hands on the country’s purse strings is FDP
leader Christian Lindner, who made digitalization one of the key platforms of his election campaign. As the new Finance Minister, Lindnerhas pledged to remove bureaucratic hurdles for new businesses andsupport digital solutions and future technologies.

struggle to complete the paperwork, especially when so much of it has to be filled out inperson. “The political conditions need to be
improved a little, especially for younger, moreinnovative companies,” says Qonto’s Germany
manager Torben Rabe.
Fortunately, it’s a problem the new German government is focused on fixing. The
coalition under Olaf Scholz has promised to
streamline the process this year, making it
possible to found a company within 24 hours.
“We were certainly glad to see the new coalition agreement,” says Rabe. “It was a document that showed a constructive approachwith some clear digitalization targets. Now

Another central plank of the new government’s economic plans haslargely been set in place by the Greens, whose former coleader Robert
Habeck is now Minister for Economic Affairs and Climate Action. In
many ways, the new government’s policies and plans can be seen as amarriage of these two goals: protecting the climate and digitalizing the
economy.

it’s time to see them get to work, and we hope
the plans will be implemented.”
As well as the focus on digitalization, the
new government’s plans include a liberalization of immigration laws specifically to make iteasier for highly skilled entrepreneurs to thrivein Germany.
A dynamic market in acountry of digital skeptics
Rabe is convinced that there’s room for growthin Germany’s fintech sector. “There’s still a lotof dynamism in the market, and of course a lot
has happened in the last few years,” he says.
“Many start-ups and companies are currently

forming in areas offering solutions in the business sector, and there’s definitely potential toserve that area better.”
Such fast-moving developments to lower
the barriers for founders belie the stereotypeof Germany as a land of digital skeptics who
distrust the Internet and where the digital
infrastructure has failed to keep pace. Rabe
believes the reality is a little more nuanced:“There are certain areas where Germany isactually a bit more advanced than other European countries,” he explains.
While some Germans might still be resistant to the pace of digital change, Rabe has
encountered plenty of businesses that are “very78MARKETS GERMANY | Focus

4
GROWTH SECTORS OFGERMANY’S DIGITALIZEDECONOMY

1

Quality digital infrastructure is central to
the new government’s economic strategy
The new coalition is determined to build up
Germany’s digital infrastructure – that means
everything from fiber optic networks to IT
security – to facilitate digital-based businessmodels in the economy.

2

Healthcare is already undergoing a digital
revolution
Virtually every aspect of the healthcare industry, from diagnosis to prescription and patientmonitoring, already has digital components.
That process will be accelerated under the
new government.

3

Energy and environmental industries are
forming the new green economy
With an environmentalist party in government, there will be new incentives for industries that help protect the climate, as well as
technology to make the energy grid more efficient.

4

Mechanical and electronic industries will
also benefit
Germany’s traditional industries stand to beboosted by new investments in digital infrastructure – particularly 5G networks – which
will make factories significantly more efficient and able to compete in the brave newworld of digitally networked industry.

»Germany needs an all-encompassing digital revolution ... We will
support digital innovations, businessand social initiatives and will invest
in open standards and diversity.«
From the new German government’s digital pledge, December 2021

open” to choosing digital ways to streamline
their practices. “German companies certainly aren’t lagging behind – if anything, theirawareness is already sharpened to the fact thatyou can’t carry on with analogue processes,”
he says.
Rabe also appreciates the digital community in Germany: “I have to say, generally, that theecosystem of digital companies in Berlin andother German cities is very lively – it’s certainly
worth getting active and networking.”
A new government with big plans
The government’s coalition agreement – signed
in early December after a surprisingly shortnegotiation period – contains a panoply of digitalization pledges. “Germany needs an all-encompassing digital revolution,” the agreement
states. “Capacities in the national government
will be reordered and bundled, an additional
central budget will be introduced, and laws
will be subjected to a digitalization check ...
We will support digital innovations as well as
business and social initiatives and will invest
in open standards and diversity.”
These are encouraging words, says Marc
Rohr, director Digital & Service Industries atGermany Trade & Invest (GTAI) : “I’m reallyglad that the issue of digitalization was treated
so thoroughly in the coalition contract. The
last couple of years, with the coronavirus, haveshown how important it is to do better on thatscore. Anyone who has worked from home inGermany found out that the infrastructure, thehardware, needed to be improved.”
The Federation of German Industries (BDI)
is also very enthusiastic. “It is very welcome
news that all necessary steps to implement
acceleration will be taken in the first year ofgovernment,” the federation commented in

its analysis of the agreement. “The implementation of a pact for planning, approval and realization between the national and regional
governments is an important step.”
From a practical standpoint, the new digital pact entails building up Germany’s glass
fiber optic network, and the government haspromised to deliver blanket “fiber-to-thehome” (FTTH) coverage across the country.
“It’s good that the politicians have recognizedthat we need to improve in certain areas,” argues Rohr. “There’s also a new awareness that
we have to be at the forefront of brand newtechnologies, and that this has to be accompanied by the appropriate subsidies or legal
frameworks.”
The list of sectors the government intends
to support covers a broad spectrum of major
future technologies: artificial intelligence,quantum technology, cybersecurity and distributed ledger technology (DLT) aka blockchain. There’s also a promise to strengthen
the so-called Important Projects of Common
European Interest (IPCEIs), to finance moredigital start-ups and to strengthen Germany
generally as a destination and location for
venture capital.
Weaknesses can be opportunities
These are signs that the new government knows
where Germany’s strengths and weaknesses
lie. One strength has been established for along while: Germany has a solid reputation
for research in the IT industry, boasting several world-class technology institutes such as
the Fraunhofer and Max Planck, which haveinterlocking networks of locations and researchareas across the country (see Outside the Ivory Towers – Germany’s research landscape,page 22).

9

MARKETS GERMANY | Focus

The new government wants to build on andexpand that competitive advantage. “The coalition partners are clearly in favor of strengthening experimental spaces to test innovativetechnologies, services and business models
under real conditions,” the BDI noted. “This is
to be welcomed, as is the will to significantly facilitate and strengthen start-ups and spin-offs.”“In research and development Germany
has been top, but in the application – thatmeans offering solutions that actually help
citizens – we’re lagging behind,” says Rohr.
“But that’s a gap that can also be seen as anopportunity,” he adds. As the biggest consumer
market in the European Union, there is plentyof room for international solutions in Germany.

won’t make a huge difference to the day-today lives of the average German citizen (aside
from making certain apps easier and quicker
to use), the technology will be invaluable forindustry. The next generation of superfast
wireless connectivity will enable factories tocommunicate more rapidly and seamlessly,
smoothing the use of artificial intelligence andthe Internet of Things in production.
“Without 5G, the interplay between intelligent production units, know-how and data capacity is impossible,” says Rohr. Given that theGerman economy is dependent on the powerof industry, and that industrial production in
the country is often spread over large areas,
the current government drive toward buildingThis is where the drive for expanding the
5G network kicks in. While 5G infrastructure

a blanket 5G network is not just important –it’s essential.

digitalize in-patient care compared to other

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Healthcare – digitalization is ongoing
Almost every sector in the healthcare industry
is being transformed by digitalization. Whether
it’s the development of pharmaceuticals, biotechnology or medical devices, digital components have found their way into all of them.
While X-rays and MRI scans have been digitalfor decades, diagnosis can now also be aided
by AI, providing higher-quality results basedon thousands of images.
However, the use and the exchange ofhealth data between medical professionals andtheir patients still leaves much to be desired,
and the new coalition government has pledged
to accelerate the various programs that are already in place to drive progress in this sector.
Again, Germany’s tardiness in the drive toMARKETS GERMANY | Focus

DIGITALIZING EDUCATION

Prof. Andrés Kecskeméthy from the Department of Mechanics
and Robotics at the University of Duisburg-Essen streams a firstyear lecture on technical mechanics in the summer semester of2020. Remote learning proved crucial in Germany at the heightof the coronavirus pandemic.

Photo: Dominik Asbach/laif10

leading European countries could turn out tobe a boon for innovative healthtech providers.
“There are so many companies that have developed excellent solutions in their own countries
and have experience with them,” says Marcus
Schmidt, director of Chemicals & Healthcare at
GTAI. “Now that Germany is catching up, there
is a great opportunity for them here – because
they have already introduced and adapted
their products and demonstrated their benefit.”Medical apps are the case in point: Apps

approved as “medical devices” can be used
for continuous treatment and allow doctors tomonitor vital data between visits. As more ofthese apps are integrated into the healthcare
system, they are fundamentally changing theway people access health services. “Germany
was a pioneer in this,” says Schmidt. “These
aren’t consumer apps anyone can buy in an
app store, but tested and approved software,prescribed by your doctor and paid by yourinsurance in Germany.”

The previous German government introduced the DiGA (digital health applications)fast-track program to accelerate these apps.
“Companies can develop their solution,
introduce it and demonstrate its medical
benefit. Then there’s a twelve-month evaluation period – if they pass it, they will bereimbursed permanently,” says Schmidt,
noting that there are 28 such applications
being used right now, eight of which havebeen fully approved.

MARKETS GERMANY | Focus“There has already been a lot of interest in
DiGA from app developers around the world.
And some European countries have announced
that they intend to replicate Germany’s system
now,” he adds.
Saving the planet with future tech
One of the main features of the coalition
contract is the linkage of future technologies
and climate protection. It’s no secret that the
new government was carried to power on a
groundswell of young voters who see the climate crisis as the defining issue of their lives.
The confluence of environmental protection
and digitalization is evident throughout government policy.
Thomas Grigoleit, director of Energy,
Building & Environmental Technologies at
GTAI, believes the energy sector is the bestmodel for how these two issues can interlace.
“Digitalization is a key technology also for thedevelopment of the energy sector,” he says.
That’s because renewable power stations must
be networked in real time so that they can redistribute energy when necessary. “This heightens
the flexibility of the grid.”
The interdependence of renewables anddigitalization is becoming more and more relevant at a local level. For example, the end-consumers of energy (car and home owners) arenow becoming active producers or “prosumers”
of energy, able to supply power back to the grid.
“If a house has solar panels on the roof, or aheat pump, or a battery, or even an electric
car that is charged at home, it can play a completely different role in the energy supply,” says
Grigoleit. “That makes a huge difference, and
it is only possible through digitalization.” Intheory, there’s nothing to stop consumers fromselling electricity to their neighbors in future.
Another sector that is opening right up in
Germany is the area of greentech or environmental protection technologies (see Growth
Spurt for Greentech, page 18). “This is of course
a vast field,” explains Grigoleit. “It covers everything from circular economies to water
management and adapting to the impacts ofclimate change in several ecosystems as wellas in urban areas.”
The BDI also acknowledges the importanceof this field. “The coalition agreement right-

SUPPORT FOR
FOREIGN DIGITALCOMPANIES
Marc Rohr, director Digital & Service Industries at Germany Trade & Invest, outlines
the help that’s available for businesses
coming to Germany.
How can GTAI help businesses looking to
expand to Germany?
GTAI supports foreign companies with ourconsulting services regarding both greenfield
and brownfield business expansions. In addition, our consultants have extensive industry
knowledge and connections, for example todigital industry associations such as Bitkom
and research institutions in the digital sector
like the German Research Center for Artificial
Intelligence (DFKI). We are always happy tomake these available to international businesspeople. Furthermore, we can activate politicalsupport and guidance for innovative companies
through our shareholder, the Ministry for Economic Affairs and Climate Action.
Does GTAI offer any financial support?
GTAI itself does not have any funding mechanisms of its own, but we assist companies inapplying for national or European funding programs like the Grants for Investments (GRW). In
addition, we can establish contact with regional
state economic development agencies, which
all have their own funding instruments.
How has the new government changed thesituation?
The new coalition’s digitalization plans havecome at a good moment, and the easing of
bureaucracy around starting new businesses
will make GTAI’s work that much easier.

ly emphasizes the potential of digitalization
for greater sustainability,” the federation has
said. “The task now must be to use innovations‘Made in Germany’ for this transformation andto closely involve German industry as a solutions provider and user.”
Smart technology will play a pivotal role inclimate protection. One example is the Future
Forest project (funded by the Federal Ministry
for the Environment, Nature Conservation, Nuclear Safety and Consumer Protection), which
involves the simulation of different scenarios offorest regeneration with the support of AI. The

11

project aggregates environmental and weather
data as well as data on damage development
and air pollution, then evaluates and correlates
it. As a response to climate change, the aim
is to develop decision-making tools for forest
regeneration in order to preserve natural ecosystems for future generations.
At the forefront of industrial progress
Another big challenge is how to maintain Germany’s leading position as an industrial nation
while meeting the climate action targets –squaring the circle, so to speak. The coalition
government has promised to tackle the issue
by digitalizing across the industrial landscape
today as well as investing in future technology.
“The new German government has certainly shown it is committed to strengthening
high-tech production in the country,” says Oliver Seiler, director of Mechanical & Electronic
Technologies at GTAI. “And there are of course
going to be opportunities for foreign companies in areas like robotics, automation, microelectronics, semiconductor production andsustainable, electric and connected mobility.”
And again, there are key areas where Germany is already ahead of the game. “Germany
is very strong in the field of production technology like 3D printing, especially metallic 3D
printing,” Seiler adds. Additive printing has
an abundance of applications from aerospace
and automotive production to the productionof nanoscale energy and medical technology.
Seiler also picks up on Torben Rabe’s pointthat Germany’s reputation as something of adigital dawdler is largely based on standards
in wider society rather than a reflection of thereality inside industry. “On the productionside, Germany is in a pretty good position, especially when it comes to digitalized automation,” says Seiler. “You don’t hear complaints
from companies in the industrial space that
Germany’s digital infrastructure is drasticallynot up to speed.”

CONTACT
marc.rohr@gtai.com
GTAI director Digital & Service Industries
www.gtai.com/digital-economy

12MARKETS GERMANY | Inside Germany“WE’VE FOUND
THE PERFECTLOCATION IN
GERMANY.”
chips that will play a crucial role in the digi-

Photo: Inteltal transformation of Europe. With our Intel
Foundry Services, we are also opening our fab
doors to serve the needs of foundry customers.
Intel’s investment plans in Germany are an important step in our pan-European strategy for a
cutting-edge semiconductor development andmanufacturing ecosystem fully integrated into
the current European landscape. Expanding
advanced semiconductor capabilities today
offers Europe a great chance to reduce its dependency on imports from Asia and can help
it achieve its digital sovereignty ambitions.

In March, Intel announced it would be building a billion-­euro
new microchip production facility in the eastern German cityof Magdeburg. Intel Germany’s managing director Christin
Eisenschmid tells Markets Germany how this record foreign
direct investment came about.

How much of this expansion is targetedat the sizeable German market? And how
much of what Intel will make in Magdeburg
will be exported?
CHRISTIN EISENSCHMID: With our expansion and investment plans we are targeting theentire European market and beyond – Germany

is key to our strategy. We plan to invest EUR 17
billion to build two cutting-edge fabs in Magdeburg with ambitious plans for expansion. Our
long-term goal is to construct a so-called “megafab” in Magdeburg, consisting of up to eight
connected factories. At our new site in Saxony-Anhalt, we plan to produce cutting-edge

Why did Intel select Germany? Its highly
skilled workforce and central geographical location in Europe were clearly strong
influencing factors, but what were someof the other reasons?
CE: These are definitely important factors, but
Germany has much more to offer. Germany is
the largest national economy in Europe. It isalso the fourth largest economy and the thirdlargest exporter of goods worldwide. Its maintech fields include automotive, digitalized
industry, cloud computing and security. The
country offers an unparalleled ecosystem ofSMEs, suppliers and customers, and it houses significant leading companies with global
impact. Germany also is home to world-classresearch centers like the Max Planck Instituteand the Fraunhofer organization. The com-

A 3D rendering of thehigh-tech processor
factory complex that
US computer chip
giant Intel is buildingin ­Magdeburg inearly 2023, at a costof EUR 17 billion.

bination of all these critical factors makes
Germany the ideal hub for Intel’s European
investment plans. In Magdeburg, we’ve foundthe perfect location in Germany. The city provides the necessary infrastructure and space tobuild the fab. Moreover, it boasts close proximity to key major cities and seven universities,
so it gives us access to highly skilled talent aswell as customers from different industries.

praised the work of German state authorities, who sometimes have a reputation
for being cumbersome. What was positive
about your interactions with them?
CE: So far, we have had excellent cooperation
with authorities both at the European andthe national level. The EU and the member
state governments we have worked with haveshown themselves to be excellent partners
for businesses and to have bold ambitions topush forward European semiconductor production. Input from government partners andestablished regulations, like those in Germany,
provide certainty and a framework for our operations. In alignment with the shared vision of
the German government and European plansto achieve greater semiconductor leadership,
we took this decisive step together to develop a
European answer for the global chip demand.
Can you give us some insight into Intel’s
decision-making process? How long did
it take? And what are the most importantfactors that can influence such a process?
CE: For the past year, we have been scouting
locations in Europe. Our site selection processincludes evaluating many different aspects,
including talent, infrastructure, financials,
supply chains, natural disaster risks, legal,
and others. Environmental factors play a keyrole, too. For example, a fab cannot be built
too close to major railroads or airports due tothe vibrations they cause. We had productive
conversations with leaders from several EU
member states and regional officials, but ultimately the site in Magdeburg scored the highest across the evaluation process and offered
the best combination of attributes to meet ourneeds. In addition, the full backing of local,
regional state and national officials plus the

Photo: IntelIn one interview, Intel CEO Pat Gelsinger

positive attitude conveyed by the citizens wasa catalyst for selecting Magdeburg.
What are the next steps and milestones inyour expansion? What challenges do Inteland the city of Magdeburg face?
CE: The next step following the official announcement is that we will go straight intoplanning. During the whole process, Intel iscommitted to engaging in a dialogue with thelocal communities involved. We are certainthat a commitment to openness, transparency
and benefits for the local communities willconvince the public of our endeavor. In thefirst half of 2023, we want to begin with theconstruction phase on an area spanning roughly 450 hectares – a size of 600 soccer fields.
Our production start is planned for 2027 andwill focus on cutting-edge semiconductors,
providing a boost to industrial transformationin Europe. Of course, this timeline is subject toEuropean Commission state aid approval andfunding approval by the German authorities.
What role did GTAI play in your decision?
CE: Our cooperation with Germany Trade &Invest has played a decisive role during theentire decision process, and we are very thankful for the productive dialogue. With GTAI asa strong partner, we were able to identify possible locations and finally select Magdeburg
as the location for our expansion. Together,
we were able to get this huge project off theground and lay the foundation for more stablesupply chains and a strong European answer
to the global chip shortage.
How important was the active support of
the German national government and theregional government of Saxony-Anhalt?
And why is gaining political support sovital generally?
CE: The support of the regional and the national government is critical to realizing such ahuge project. As a US company in Germany, it’s
important that everyone is behind the project.
We were very happy to see that Saxony-Anhalt
and State Premier Reiner Haseloff made it a toppriority and set a lot in motion in a short time.
Everyone – the city of Magdeburg, the state of
Saxony-Anhalt, and the German national government – had a common goal and enabled an
open and solution-oriented collaboration. The
construction of one of Europe’s most modern
factories will help Europe’s supply chains tobecome resilient and less dependent on Asian
imports. We are proud to do our part to advance
Europe’s position in the semiconductor sector.

MARKETS GERMANY | Chemical Industry

GERMANY

18

SWITZERLAND

8GERMANY LEADS EUROPE
IN CHEMICAL PATENT­APPLICATIONS
Share of European
patent applications (as %)Source: European Patent Office (EPO)

NETHERLANDS6FRANCE

7

Photo: Jung/laif14

MARKETS GERMANY | Chemical Industry

Chemical­REACTION
Germany’s chemical industry is large and prosperous but it’s also one of the biggest emittersof greenhouse gases. That needs to change if Germany is to meet its 2045 climate goals – andgreen hydrogen is at the heart of the solution.

For a glimpse at the future of the German chemical industry, look toward
the sun-soaked expanses of southern
Spain. That’s where Viridi RE, a German company specializing in renewable energy installations, is planning to produce hydrogen andmethanol using electricity from dozens ofhectares of photovoltaic panels and wind turbines. By the end of 2025, it aims to be pumpingout over 60,000 tons of green hydrogen eachyear – all of it to be taken by train to German
chemicals factories in Baden-Württemberg,
more than 2,000 kilometers to the north.

THE BOTTOM LINE
Germany wants to clean up
its greenhouse-gas-intensive
chemical industry. Hydrogen
will be at the center of thattransition, and international
companies with ready-to-go
solutions will stand to profit.

Viridi’s senior manager for policy and innovation, Daniel Argyropoulos, estimates that when
they begin operations in 2025 his company willsave more than 200,000 tons of CO2 emissions
annually. By buying methanol manufactured
using regenerative energy, Viridi’s chemicals
customers can move closer toward their carbon
neutrality goals.
“Right now, the chemical industry relies
on natural gas, which is a fossil fuel and will
have to be replaced,” Argyropoulos says. “Asa green methanol provider, we expect a hugedemand.”15

16

MARKETS GERMANY | Chemical Industry

CHEMICAL FOOTPRINT

The growing market for green hydrogen (H2)and methanol (CH3OH) is part of the German
government’s new push to use H2 production
to decarbonize large segments of the country’s
industry, covering everything from automobiles to chemical plants.
“In order to further decarbonization, thehydrogen has to be green,” Argyropoulos says.
“That means renewable energy targets havebeen dramatically increased – and at the sametime, industry needs a lot more decarbonizedgas.”
The time is now
Germany’s massive chemical industry is oneof the four largest in the world and represents
over 10 percent of the country’s GDP. On thedownside, chemical synthesis is responsiblefor 15 percent of the country’s total carbon
emissions. Chemical producers are also thelargest industrial consumers of gas, oil andelectricity globally.
“The whole process is accompanied by theuse of energy, mainly from fossil fuels,” says
Gerold Neumann, head of Vivevo Energy. “To
get away from that, the energy needs to comefrom renewables.”The new climate targets set by the recently
elected German government have accelerated change. “There’s a lot of pressure on theindustry in Germany to be carbon neutral by2045, and in Europe by 2050,” says chemist Jörg
­Rothermel, head of the energy, climate change
and raw materials department at the German
Chemical Industry Association (VCI). “That’s
not that far away, especially when it comes to
new chemicals plants being planned today thatwill still be working in 2045.”
But there’s another incentive to decarbonize the industry. As the world approaches thepeak of its reliance on oil, fossil fuel prices willfluctuate more than in the past, encouraging
chemicals companies to turn to more predictable energy and raw materials resources.

– 39.6 %Decrease in energy-related
CO2 emissions of thechemical-pharmaceutical industryin Germany from 1990 to 2019

€227BN
Turnover in the German
chemical-pharmaceuticalindustry in the year 2020

Source: German Chemical
Industry Association (VCI)

Changing the equation“Hydrogen will be at the heart of this process,”
explains Germany Trade & Invest’s Chemicals
expert Raphael Goldstein. His prediction isbased on a long-established practice. “Thechemical industry is already the biggest userof hydrogen in Germany,” Rothermel says.
As one of the country’s biggest CO2 emitters, the responsibility for decarbonization
should fall at least proportionally on the industry. At present, the vast majority of hydrogenused to make chemicals is produced by breaking natural gas into H2 and CO2. The result ismillions of tons of greenhouse gas emissions.
The industry knows that this equation will haveto change.
“What’s going to happen in the next decadeis replacing the conventional H2 production

process with green hydrogen,” Rothermel says.
In theory, the chemistry is simple: Renewableelectricity is used to power electrolyzers, which
break water into its component elements O2
and H2.
Given enough renewable electricity, there
is no limit to the amount of carbon-neutralhydrogen that can be produced. And a vast
amount is going to be needed. Germany’s
Ministry for Economic Affairs and Climate
Action (BMWK) says the country will need
up to 110 terawatt-hours (TWh) of hydrogenby 2030 – and all of it has to be sourced fromrenewables like solar, wind and geothermal.
For comparison, Germany’s total electricity
mix presently amounts to ca. 500 TWh. “Underno circumstances will it be possible to produce
the amount of green hydrogen needed solely
in Germany,” Rothermel says.
That means that Germany will have toimport lots of green hydrogen. So, in addition
to building electrolyzer plants in parts of Germany with easy access to renewable energy
sources, Viridi and others are beginning to workwith companies outside the country.
Logistical solutions
Because transporting large amounts of hydrogen is logistically complicated, there’s apressing need for expertise and solutions inthis field. In the short to medium term, investors have been betting on green methanol(produced by renewables) as an energy carrier. Extensive infrastructure already exists totransport and store liquid methanol, and the
production of it binds H2 and CO2 – in otherwords, it captures carbon as well as being a
fossil fuel substitute for gas-intensive chemical
processes.
Viridi has located enough solar energy inSpain to produce methanol at sites alreadyfitted out with hundreds of hectares of photovoltaic panels. They then plan to ship it northon special train cars to the Karlsruhe area, aMARKETS GERMANY | Chemical Industry

chemical industry hotspot. Once there, “it will
form the basis for all sorts of chemical products,” Argyropoulos says.
Another approach is to build electrolyzers
and chemicals plants close to renewable energy
sources. Vivevo is planning a hydrogen plant at
ChemCoast Park Brunsbüttel, an industrial areain Schleswig-Holstein with easy access to windenergy produced on the North Sea and future
pipelines that can also be used to transport greenhydrogen to customers across Germany.
Big opportunities for investors
Both approaches leave lots of flexibility for for-

The European Union is creating a framework
to make subsidies for hydrogen productionin the form of Important Projects of Common
European Interest (IPCEI) funding.
Some major questions remain unanswered,however: for example, whether it makes more
sense to transfer old chemicals plants and build
new ones close to renewable energy sources –like on the windy North Sea coastline – or build
power lines to move green electricity to existing chemical manufacturing hotspots likesoutheastern Bavaria’s “chemical triangle” orchemical industry hubs like Baden-Württemberg and Karlsruhe.

eign investors to get involved. “The technology
exists, but it needs to get a lot more efficient,”
Rothermel says. “Right now, it requires a lotof power, and the equipment is expensive.”
The transition is likely to be subsidized in
the same way renewables were 30 years ago.

Vivevo hopes that its Brunsbüttel park will
be a forerunner of the future. The 100-megawatt
electrolyzer there will make H2 and combine
it with CO2 produced by a nearby waste-to-incineration plant to synthesize methanol. It willthen be sold to other companies in the Chem-

17

Coast industrial park as a green alternative to
traditional natural gas.
“We have industry consumers right on ourdoorstep, plus green energy is here,” Neumannsays. “And it’s a modular concept that can be
replicated in other areas.”
As Germany pivots to the hydrogen economy, companies with ready-to-go solutions
for the chemical industry will be in a strong
position to profit. “Germany is where you want
to go,” Neumann says. “The market is huge
– and so is the interest from international businesspeople.”

CONTACTraphael.goldstein@gtai.com
GTAI expert Chemicals
www.gtai.com/chemicals

GOOD CHEMISTRY
Germany’s chemical industry can only be completely decarbonized by using green
energy. That requires its four pillars – electrolyzer technology for sufficient domestic
supplies, improved effiency, new infrastructure, and green hydrogen –and circular thinking.

ELECTROLYZERSEFFICIENCYINFRASTRUCTURE

GREEN HYDROGENElectrolysis is the process of using
electricity to break chemicals
down into their component parts.
A recent report by the German
Chemical Industry Association (VCI)
estimated that 600 terawatt hours
of renewable electricity will be
required each year to sustain thechemical industry’s needs. “Companies that want to move into green
H2 need to invest in their own
electrolyzers,” says Jörg Rothermel,
the VCI’s energy expert.

Many industries in Europe arehaving to shift toward a moreresource- and energy-efficient,circular business model – and thechemical industry is no exception.
Some of the CO2 savings cancome from recycling and tightening energy efficiency at existing
manufacturing plants, predicts
GTAI’s Chemicals expert RaphaelGoldstein. But the biggest shift will
have to come from changes in theenergy and feedstock mix.

To help the chemical industry
transition to a low-carbon future,experts predict new infrastructureand storage solutions will be needed. Chemicals plants that integrate
electrolyzers, pipelines, high-pressure containers to ship greenhydrogen and methanol, logistical
digital solutions and steel producedwith renewable energy will all bein demand in future, as Germany
pushes forward its agenda to clean
up the chemical industry.

Electrolyzers are just the beginning.
Hydrogen gas is tricky to workwith: It can corrode pipelines andtankers and is highly explosive. One
workable alternative is to convert itto methanol (CH3OH) by combining
it with CO2, a process that bothmakes it easier to work with andcaptures carbon dioxide. It’s agood substitute for products thatindustrial consumers traditionally employ, so the infrastructure
already exists.

18

MARKETS GERMANY | Technology

GROWTH SPURTFOR GREENTECH
Germany’s efforts to transition to a sustainable economy have provided a major boost to
funding for greentech start-ups. International companies are flocking to Germany to benefit
from the boom in environmental technology and generous government incentives.

A

short visit to Berlin to attend Fruit
Logistica – the world’s biggest trade
show for fresh produce – was enoughto convince Nikita Gulin that Germany’s vibrant capital was the place to grow his business.
The cofounder of the agricultural technology
start-up Agranimo relocated from Chile to Berlin in 2021, which helped secure an investment
of EUR 2 million from Netherlands-based Nector Holdings.
Agranimo provides real-time data thatenables farmers to use water, fertilizers andpesticides far more efficiently than when they
employ conventional methods. The data also
helps reduce CO2 emissions by enabling foodretailers to improve cold chain and inventory
management.
“Without digital monitoring of climate,soil and crops, farmers overirrigate a lot, andthe same is true for fertilizers and pesticides,”Gulin says. “If a supermarket has a heads-up
on incoming shipments, it can arrange a promotional campaign rather than dumping produce whenever there is an imbalance between
supply and demand.”No longer niche
Greentech has grown into a major segment of
the German start-up scene, bolstered by thegovernment’s pledge to cut CO2 gas emissions
by at least 55 percent of 1990 levels by 2030.

50%
of emission reductions to reach the net-zerobenchmark will be due to technology
Source: International Energy Agency (IEA)$3.4 BNis the amount of venture capital invested in­German climatetech start-ups in 2020
Source: Speedinvest

According to the German Startups Association’s Green Startup Monitor 2021, 30 percentof German start-ups are now greentech enterprises – a 21 percent increase from 2019.
Germany has even taken the lead in terms of“climatetech start-ups” in the EU, adds the VC
fund Speedinvest’s European Climate Tech
report, with over 250 companies. That’s morethan twice as many as France in second place.
It’s no surprise then that last October,World Fund – Europe’s biggest dedicated climatetech venture capital fund – was launched
Source: European Cargo
Bike Industry Survey

in Berlin. It aims to raise EUR 350 million by
the end of 2022.
“Sustainability has long ceased to be aniche topic among German founders, who
are the pioneers in new-type economic activity,” says Christoph J. Stresing, director of theGerman Startups Association. “The researchlandscape in Germany is a real treasure, withgovernment programs such as the EXIST Business Start-up Grant lending important support
for innovation and commercialization.”
Connecting start-ups and SMEs
The Digital Hub Initiative also supports green­tech innovation. The 12 hubs throughout thecountry provide networks, incubators, accelerators and coworking spaces to facilitate projects
between start-ups and SMEs.
Agranimo is part of the Dresden/Leipzig
hub, whereas Appanion – a provider of dataservices for the precise evaluation of greenhouse gas emissions from freight transport –is a member of the Hamburg hub. The data
Appanion analyzes from digital order management systems in trucks and cargo ships
provides “emissions transparency” throughout
the entire shipping process.
“If a logistics company invests in an electrictruck fleet, the purchasing manager of theircontractor, e.g. an automaker, can understandthis change through our platform, allowing theMARKETS GERMANY | Technology

19

The young agritech
firm Agranimo supplies sensor technology for monitoringwater, fertilizer andpesticide levels forgrowers in Africa.

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toward this supplier, bundle batches or shifttransport modes, for example, from road torail, and reduce the CO2 footprint.”
In the Munich digital hub, the start-up­eco.­mio aims to reduce emissions caused bybusiness travel with an algorithm that integrates with the client company’s booking tool. It
benchmarks travel behavior, proposes the mostclimate-friendly travel mode for business trips
and promotes cheaper and eco-friendlier offers.

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THE BOTTOM LINE
Germany has more greentech
start-ups than anywhere else in
the EU. And the German government is offering attractive
incentives and support to keep
those numbers growing.

Photo: Agramino

130“By not only cutting CO2 emissions but also
costs, our algorithm has the perfect selling point, which opens the doors wide for agreen­tech start-up like we are,” says Katharina­Riederer, eco.mio’s CEO.

CONTACT
almut.weigel@gtai.com
GTAI expert Trend &Innovation Scouting
www.gtai.com/startups-germany

20

MARKETS GERMANY | Information Technology

Photo: Vanitjan/Adobe StockTECHNOLOGIES TRANSFORMING LOGISTICSROBOTICS AND
AUTOMATIONARTIFICIALINTELLIGENCE

INTERNET OF
THINGSBIG DATAANALYTICS

Due to lower costs, newsoftware and improved capabilities, advanced robotics andautomation technologies are
increasingly entering the German warehouse. Innovations
such as autonomous driving
technologies and flexible
picking systems help increase
efficiency and reliability while
reducing operational costs.

German companies are realizing the benefits of machinelearning to improve material
handling and delivery. AI
helps solve complex logistic
challenges like dynamic route
optimization, demand andcapacity forecasting. Areas ofapplication include warehouse automation and smart
roads.

The new wave of technology
is expected to close connectivity gaps. The 5G data
network offers greater speed,
more volume and flexibility
for linking people and things.
Real-time stock level monitor­
ing, advanced analytics for
AMRs and IoT-enabled trucks
will help reduce downtime
and fulfill increased customer
demand.

Due to the large amount of
supply chain data and bettermachine algorithms, companies can use information to
gain predictive insights. Big
data can be used to streamline operations, diagnose
operational problems andoptimize network planning.
Predictive logistics cananticipate future operating
scenarios.

SMART LOGISTICS
Are on the Move
Digitalization, the Internet of Things and artificial intelligence are rapidly remaking the logistics
and supply chain sectors. The German market for international providers of logistics solutions
is heating up – stoked by the coronavirus pandemic and growth in e-commerce.

F

or Swisslog, a Swiss provider of automated intralogistics technologies, 2021

was an important year. In April, about
250 employees of the German subsidiary moved
to a larger compound within the city of Dortmund. Swisslog’s new site includes facilities forsoftware development and a technology center
for robotics. It also intends to expand its local
workforce and is currently advertising almosta hundred open positions.
The company is readying itself for new opportunities in the German market, as demand
for logistics solutions and services explodes.
This will entail new forms of “smart logistics”
and not just traditional expansions in terms ofspace and personnel.
Swisslog CEO Christian Baur characterizes
the new site as “a sign of expansion and futureorientation as well as a commitment to the
Ruhr Valley metropolis and Germany.” And
he’s not alone in thinking Germany is the place
to be for the new logistics sector.
A logistics Silicon Valley
US company Dematic, a supplier of intra­
logistics solutions, warehouse and logistics
automation, also sees huge and growing prospects in Europe’s largest economy. “Germany
is the Silicon Valley of intralogistics,” says
Dematic’s MD Jens Hardenacke. Located in
the heart of Europe, it serves as a think tankfor ­intra­logistics worldwide. “Germany has
many well-trained specialists and they drive
innovation forward.” Accordingly, the sector is
one of the most dynamic markets in Germany.
“In logistics, location is key,” says David
Chasdi, Senior Manager at Germany Trade &Invest (GTAI). “Germany, however, offers much
more than just being the EU’s geographic center with easy access to some 500 million plus
consumers. With Europe’s strongest economy
and over 60,000 logistics companies large andsmall, Germany generates world-class logistics

THE BOTTOM LINE
Micro-fulfillment, fully automated warehouses and item-picking
robots – the need for innovative
logistics concepts in Germany
is huge. International logistics
equipment suppliers and IT
companies should take note.

expertise and variety and is Europe’s number
one logistics market generating EUR 280 billion
revenue in 2020.”
An increasingly important subsector of thismarket is intralogistics or everything related
to the logistical flow of goods, information andmaterial within the walls of fulfillment or distribution centers.
2021 was a strong year for German materials
handling and intralogistics suppliers. According to estimates, the production volume rose
to EUR 22.6 billion, up 6 percent from 2020.
Moreover, German logistics companies’ investments into IT and automation make the market
very interesting for international providers.
Due to ever-increasing cost and efficiency pressures, many logistics companies inGermany are seeking innovative warehousing and supply chain solutions. The boom in
e-commerce is causing retailers to rethink theiroperations, from inventory and dispatch tohandling returns. “E-commerce is growing at
double-digit rates and this is happening acrossalmost all industries,” says Hardenacke.
Online food retailing in Germany is also developing fast and presents a special challenge
for operators: The goods have to be retrieved
from the warehouse, assembled to order andpackaged in a durable manner before being delivered. One answer to the challenges that arisearound the so-called “last mile” are micro-fulfillment solutions – highly automated storage
that fits into the back room of a grocery store.
In the search for potential savings, large
warehouse operators are also increasingly turning to robotics and even to fully automatedwarehouses. “As a result of the high labor costs,
the demand for automation technology in Germany is particularly high. German labor safety
regulations also play a role in the decision toautomate,” says Hardenacke. “The dangerous
part of warehouse work is increasingly being
handed over to machines.”
AI and IoT
Artificial intelligence (AI) and the Internet ofThings (IoT) are making robotics even moreessential to cutting-edge logistics. One popular
use for AI is order picking: Self-learning robots
scan the goods, select the correct item and place
it on the conveyor belt. In addition, Autonomous
Mobile Robots (AMRs) cruise around the warehouse: Using cameras, IoT sensors and lasers,
the AMRs recognize their surroundings andchoose the most efficient route to dispatch.
“Customers in Germany are increasingly
looking for flexible and mobile solutions,” says
Hardenacke. “In some areas, conveyor belts are
increasingly being replaced by autonomous mobile robots or driverless forklift trucks.” AI is also
being used for predictive logistics, as monitoring
global supply chains is crucial to limiting pandemic-related and other disruptions.

CONTACT
david.chasdi@gtai.com
GTAI expert Logistics
www.gtai.com/logistics

22

MARKETS GERMANY | Medical Industry

OUTSIDEthe Ivory Towers
German R&D often takes place outside of the “ivory towers” of universities at independent institutions like the Fraunhofer and Max Planck societies and the Helmholtz and Leibniz associations.
They are technology hothouses, partnering with industry to develop cutting-edge solutions.

P

erhaps the trend in agriculture at the
moment is “smart farming.” As one of
the global industry’s heavyweights,
equipment manufacturer John Deere is in frontof that curve. The US company is employing
satellite systems, wireless communication
and big data analytics to improve crop yields
in sustainable ways. And to create these newtechnologies, it’s teamed up with Germany’s
Fraunhofer Society.
Among their collaborations is the NaLamKI project, which aims to improve the quality
and flow of agricultural processes by means ofcloud and artificial intelligence (AI) technologies. The Fraunhofer’s Heinrich Hertz Instituteand other partners are helping Deere develop
a cloud-based software-as-a-service platform.
This platform will provide AI applications
to help farmers to better analyze crop and soil
conditions and assist with irrigation, fertilization and pest control in order to increase crop
yields, lower costs, reduce emissions, conserve
resources, preserve biodiversity and protect
the environment.
The project is a prime example of how
Germany’s world-renowned, nonuniversity research organizations advance the development

THE BOTTOM LINE
Germany’s scientific researchsector boasts world-leadingorganizations working in specialist fields across a huge variety of
sectors. Their excellence coupledwith their pragmatic approachmakes them a fantastic businessresource.

of cutting-edge technologies for industrial andsocial progress and collaborate with international companies that come to the country.
A quartet of excellence
Germany’s unique nonuniversity researchsector complements the country’s leading
universities and encompasses some 1,000
publicly financed research facilities. Many of
the nonuniversity institutes are part of fourlarge research organizations: the Fraunhofer
Society, the Max Planck Society, the Helmholtz
Association and the Leibniz Association. All

receive large amounts of national, regional andlocal funding.
With 75 institutes and research centers
across the country, the Fraunhofer Society
is Europe’s largest organization for application-oriented R&D. It is owned by national andregional governments but gets 70 percent of its
funding from contract work. Its main fields ofresearch include health, environment, transportation, energy and raw materials.
The nongovernmental but government-backed Max Planck Society has 86 institutes and research centers that focus on
the natural, life and social sciences and thehumanities.
The Helmholtz Association – Germany’s
largest scientific body – conducts research inenergy, the environment, health, material science, aeronautics, space and transport. Amongthe Helmholtz Association’s 19 independent institutes is the German Aerospace Center (DLR),
which itself boasts more than 50 institutes.
Its self-defined mission is “solving the grandchallenges of science, society and industry.”
The Leibniz Association, a nonprofit organization, is a union of 96 independent research
centers that cover the natural and environmen-

MARKETS GERMANY | Medical Industry

Benjamin List celebrates after­receiving the 2021 Nobel Prize for
Chemistry (plus a big bouquet offlowers) at the Max Planck Institutefor Coal Research in Mülheim, where
he is a director.

Photo: picture alliance/dpa/Federico Gambarini

SAVE THE DATE!
Meet stakeholders and the GTAI
experts!
Germany Trade & Invest will hold a
district show on the topic of hydrogen forinterested international investors. Be partof the conversation as policy makers andindustry representatives discuss Germany
as a hydrogen location.
Date: July 12, 2022
Hydrogen – The Gold of the Future
Germany's coalfields as the energy
regions of the futureThis is a hybrid event. Please contact
sandra.moser@gtai.com for more information and event registration.

23

THE “BIG FOUR” OF GERMAN RESEARCH
From aeronautics to minerals and climate science to social science, Germany’s­independent research institutes cover a vast spectrum of R&D areas.

Fraunhofer Society (founded 1949)
FOCUS: applied research2019 BUDGET: EUR 2.9 billion
STAFF: 29,000

Max Planck Society (founded 1911)
FOCUS: natural, life and social sciences
and the humanities, cooperation with universities
2018 BUDGET: EUR 2.2 billion
STAFF: 23,767

Helmholtz Association (founded 1995)
FOCUS: energy, environment, health, matter, aeronautics,
space and transport
2020 BUDGET: EUR 4.9 billion
STAFF: 42,000

Leibniz Association (founded 1990)
FOCUS: natural and environmental sciences, engineering,
economics, spatial and social sciences and the humanities
2019 BUDGET: EUR 1.7 billion
STAFF: 20,000€105.9 BN

4,500

638

Share of spending on R&D
relative to GDP in Germany

Total amount invested in R&D in
Germany in 2020

Source: Federal Statistical Office(preliminary study, 2020)

Source: Federal Statistical Office(preliminary study)

Number of inventions supportedby the Max Planck Society throughto market launch since 1979

Number of patent applications
filed by Fraunhofer Society
employees in 2020

Source: Facts about Germany

Source: Fraunhofer

3.1%

tal sciences, engineering, economics, spatialand social sciences and the humanities.
A pragmatic approach to progress
Reflecting their distance from the ivory towersof pure academia, these organizations focus on
the development of key technologies and theirpractical and commercial uses, both today andin the future.
The Max Planck Society’s most successful
patent to date, for example, is its Fast Low Angle
Shot (FLASH) technology. Developed by the
Max Planck Institute for Biophysical Chemistryin 1985, FLASH technology led to the creationof magnetic resonance imaging (MRI), which isroutinely used today by medical professionals
worldwide to examine patients.
All told, according to preliminary figuresfrom the Federal Statistical Office, Germany
spent nearly EUR 106 billion, or just over three
percent of its total GDP, on research and devel-

EU’S TOP R&D INVESTORS
R&D expenditure in Germany and other EU
countries (as % of national GDP)

3.5

3.5

3.2

3.1

Belgium

SwedenAustria

Germany

3.0

2.9

2.4

2.3

Denmark

FinlandFranceEU

Source: Eurostat

opment in 2020. Publicly funded institutions
like the “big four” accounted for three-quartersof that sum. Some 115,000 people work for extra-university research institutions, more thanhalf in R&D. Some EUR 600 million went tocorona-related research in 2020, highlighting
the significance of nonuniversity research in
the German R&D landscape as a whole.
When Germany’s new government came
to power in December, it pledged to prioritize
strengthening research, promoting innovation
and accelerating the transition from theory toapplication. The government has also signaled
its support for more joint funding of university
and nonuniversity research.
“Science and research contribute substantially to progress,” the new Minister of Education and Research Bettina Stark-Watzinger has
said. A former director of the Leibniz Association’s Sustainable Architecture for Finance inEurope (SAFE) research center, Stark-Watzing-MARKETS GERMANY | Information Technology“Our institute excels
in studying the incentives, determinants
and implications ofinnovation.”er stressed the government wants to do morefor Germany’s multi-faceted research landscape, for example by increasing government
expenditure on R&D to 3.5 percent of GDP.

Photo: Max Planck InstituteAn international outlook
One of the main bankrollers of scientific research is the German Research Foundation(DFG), which has an annual budget of someEUR 3.3 billion. In 2020, it funded more than
31,100 new and ongoing projects, includinginternational collaborations.
Among the many important international projects the DFG has funded is theWeizmann-Helmholtz Laboratory for Laser
Matter Interaction (WHELMI) in Israel – a joint
project between the Helmholtz-Zentrum Dresden-Rossendorf (HZDR) and Israel’s Weizmann
Institute of Science. The laboratory develops
high-intensity lasers for medical applications.
The Max Planck Institute for Astronomy
in Heidelberg recently celebrated anotherinternational collaboration: contributing tospace exploration by developing and building
key technical components for the James Webb
Space Telescope.
Thinking green
Germany’s ambitious climate and environmental protection goals are reflected in the numerous ongoing research projects in the field andin a number of newly established centers. For
example, Fraunhofer added a new independent
research institute this year: the Fraunhofer FabBattery Cells. It aims to accelerate and enable
more efficient and cost-effective production ofhigh-performance battery technologies.
The Helmholtz-Zentrum Hereon, meanwhile, is tackling the challenges of hydrogen

Alexander Suyer, Research Coordinator at
the Max Planck Institute for Innovation andCompetition, provides insight into the German research landscape.
What does your institute do?
The Max Planck Institute for Innovation andCompetition is committed to fundamental legal
and economic research on processes of innovation, entrepreneurship and competition, andtheir regulation. Like the other 85 institutes ofthe Max Planck Society, we focus on understanding and explaining the basic principles
in our field of interest. This means we explore,e.g., the strengths and weaknesses of the patent
system, ways to foster innovation that mitigatesclimate change or opportunities of data sharing.
Concisely, our institute excels in studying the
incentives, determinants and implications ofinnovation in an interdisciplinary effort fromboth a legal and an economic perspective.
How are you financed?
As part of the Max Planck Society, our institute is mainly financed by public funds from
central government and the regional states. In
addition, the Society and its institutes receive
third-party project funding from public andprivate contributions.
What generally distinguishes the German
research landscape?
Germany’s research infrastructure encompasses university research as well as several
large independent research organizations that
attract outstanding scientists, are well funded
and produce internationally recognized results.
Moreover, many leading global companies –both from Germany and abroad – have strong
R&D divisions in Germany.
What is your relationship with the German
government and the economy?
As an independent institution, we provide
evidence-based research results to academia,
policymakers, the private sector and the public.
We inform and guide the legal and economic
discourse on an impartial basis, for example on
stimuli for innovation and entrepreneurship, intellectual property rights, or competition rules.

storage. It recently expanded cooperation with
the Helmut Schmidt University in Hamburg inresearching hydrogen storage and the integration of hydrogen-based energy systems – essential complementary technologies for Germany’s
energy transition from fossil fuels to renewables.
Another environmentally pertinent andpromising area of research is plastic recycling.
Researchers at the Fraunhofer Institute for
Structural Durability and System Reliability
are partnering with Bosch and Bosch-Siemens-Hausgeräte to examine how recycledplastic can be efficiently processed and optimized to match the quality of new plastic.
Profits and social benefits
Coming back to John Deere, the need for greater sustainability in modern agriculture – whichmust balance ecological concerns with economic incentives – underscores the advantagesof collaborations between research organizations and private industry in Germany.
“Customers expect low-cost, high-quality
food; society expects ecological, sustainable,
diversified agriculture – and, of course, it must
be possible to manage a farm profitably,” says
August Altherr, the recently retired directorof the John Deere European Technology Innovation Center.
Altherr praises the work of Fraunhofer institutes in helping to overcome these challenges,
particularly the Agricultural Data Space digitalplatform developed by the Fraunhofer Institutefor Experimental Software Engineering. The
platform provides a wide variety of agriculturaldata, including information on weather, soil conditions, pest infestation and fertilizer requirements. It assists farmers in optimizing the value
chain – both ecologically and economically.

25

26

MARKETS GERMANY | Information Technology

GERMANY’S NEW
Investment
Funding Map
On January 1, 2022, the latest investment incentive funding map from the
Joint Task Program for Europe came into effect. Michael Schnabel, ­Germany
Trade & Invest’s senior manager for Finance & Incentives, tells us what itmeans for businesses in Germany.

So what’s new in the funding map for­Germany?
MICHAEL SCHNABEL: Well, the effects of
Brexit have made themselves apparent. The
map is designed to fund investments in areas of Europe that are economically weaker,
structurally underdeveloped or shrinking in
population compared to the more prosperous
areas. Because the comparatively wealthy British population has now left the EU, Germany
in general has become more prosperous relative to the rest of the EU-27 population, so thefunding to some regions has been reduced,
along with the actual number of regions covered by the incentive.
That doesn’t sound like good news. Or is it?
MICHAEL SCHNABEL: Taken on its own, it’s
not, but it’s certainly not all bad news. Although there are fewer funded regions, theactual funding has increased in some regions.
For example, in almost all of the regions close
to the Polish border, an investment can now
be part-funded with a 25-percent cash grant
instead of the previous 20 percent. Many otherregions in eastern Germany, as well as someareas where the economy has shifted awayfrom coal, can be funded with a 15-percent
cash grant compared to 10 percent. More-

MICHAEL SCHNABEL
Senior manager for
Finance & Incentives
Michael Schnabel has worked at GTAI for a
total of eight years, offering support andfunding insights to investors. It’s fair to say
there’s no incentive he doesn’t know about.

over, small and medium-sized enterprises
get additional benefits, with medium-sizedcompanies eligible for an extra 10 percent andsmall enterprises up to an extra 20 percent. So
a small enterprise on the Polish border could
be eligible for a cash grant of up to 45 percentof the capital expenditure as an incentive for
its investment.
What exactly do these incentives cover?
MICHAEL SCHNABEL: There are two waysof assessing the eligible costs of a business
investment: either on the eligible capital expenditure of the investment, or on two years’salary of the jobs created at a cost to compa-

ny. The capital expenditure option is often
an interesting opportunity as it reduces thelarge upfront costs associated with construction or development of a new facility. There
are some investment cases where personnel
costs are decisive, for example in the services
sector, where the investment grant solutionof reducing salaries for two years can be more
beneficial.
That sounds generous. Is there a catch?
MICHAEL SCHNABEL: No major catches. But
it is down to the individual regional Germanstates to govern and distribute their own
budgets as efficiently as possible. The potsof money are not endless, and the incentive
amount decreases incrementally. For investments over EUR 50 million, the incentive ishalved, and over EUR 100 million it is reduced
to a third and an EU Council notification isrequired.
Is there a limit in absolute terms? You hearof investments for which capital expenditure totals millions, even billions.
MICHAEL SCHNABEL: There’s no explicit
limit, but each state ultimately determines
how much they can afford. Nobody has a rightto the maximum incentive.

Photo: picture alliance/ASSOCIATED PRESS/Patrick Pleul

MARKETS GERMANY | Information Technology

And this grant, or incentive, can be used to
pay for anything and everything?
MICHAEL SCHNABEL: That would be great,
wouldn’t it, but sadly, no. The grants arecovered by both EU and German legislation,
which is quite precise about the kind of investment this program is designed to incentivize.
Sales and marketing activities, for example,
are excluded, as are activities like agriculture,
which has its own incentive programs.
What other conditions are attached? You
said, “no major catches,” but presumably
there are definitions and limits?
MICHAEL SCHNABEL: There is a national
coordination framework that sets out thebasic conditions. It’s our job to help guide abusiness investor and assess an investment’s
viability. But perhaps the most important conditions are as follows: Firstly, 25 percent of thecost threshold – be it capital expenditure or
the salary option – must be obtained by thecompany from a nonsubsidized source. So a
company wanting to spend EUR 10 million ona new facility must provide EUR 2.5 million
from its equity or a loan without any subsidy
component. Secondly, the jobs created, and27

German Chancellor
Olaf Scholz, Brandenburg State Premier
Dietmar Woidke andTesla CEO Elon Musk
attend the opening of
Tesla’s German gigafactory in March.

the subsidized assets, have to be kept at a given
location for five years after the investmentcommences (there are some exemptions forSMEs). Thirdly, incentivized projects should
normally not take more than 36 months tocomplete – although that can be extended insome cases. Fourthly, the maximum capital
expenditure that can be incentivized is EUR
750,000 per job created, meaning very capital-intensive investments will have a built-in
limit on expenditure. Finally, and perhaps
most importantly, nothing can be incentivized
retrospectively, so it is important not to proceed before an incentive has been approved.
Ok, so check first before spending. But how
does an investor go about applying for the
incentive? Do you do that as well?
MICHAEL SCHNABEL: No. The grants areadministered by the economic development
agencies and state banks of the regions where
the grants are applicable. So a prospective business investor would, ultimately, have to apply
to these banks for the grant. We can only say
what the incentive level in each respective
region is and explain the legal framework to
help investors make their location decisions,assuming cash incentives are a major factor.
Disbursement of the money and processing of
applications are matters for the regional states.
Is there a lot of bureaucracy involved?
MICHAEL SCHNABEL: Not as much as you
might think. There is documentation to procure,but the process itself is fairly straightforward. Fora clarified investment you could expect to wait
about three months from application to approval.
Finally, what happens if an investmentchanges from what was outlined in theapplication?
MICHAEL SCHNABEL: If an investment ends
up being smaller, the incentive money is simply returned for the part of the investmentthat was not realized.

CONTACTmichael.schnabel@gtai.com
GTAI expert Finance & Incentives
www.gtai.com/incentives

28

MARKETS GERMANY | Start-ups

MARKETS GERMANY | Manufacturing

BERLIN: GERMANY’SVENTURE CAPITALThe German capital is famous for its start-up scene and trumps the restof the country – and most European capitals – when it comes to investments. That’s why international venture capital funds are flocking there.

Photo: DaVinci Kitchen GmbHIn April 2021, the early-stage venture
capital (VC) fund Antler, originally fromSingapore, opened an office in Novalisstrasse in Berlin’s Mitte district. When the VC
launches a new cohort of fledgling businesses, there is a flutter of activity, with up to 60
founders eagerly awaiting the start of a thrilling
ten weeks ahead.
In the first phase of the Antler cohort program, founders meet and team up with otherpotential cofounders in order to jointly develop their idea and test business models. A
few weeks later, they will pitch their idea to an
investment committee composed of partners
from the local and global Antler team as wellas top local VCs.
Antler has run two cohorts so far under
its Central Europe Fund which is targeted at
EUR 50 million. It plans to invest in 160 companies over the next four years. Among thestart-ups Antler Berlin has already supported are cryptocurrency robo-investor Pecalla,
marketplace-as-a-service provider randevu
and clare&me, a cognitive behavioral therapy-inspired AI application for voice coaching.
“I am personally very excited about theentrepreneurial talent across the region andthe opportunities this presents to us as an early-stage investor,” says Sarah Finegan, director at Antler Berlin. “Berlin was an excellent
choice for Antler, not least given that the city
is one of the biggest start-up ecosystems andan emerging tech hub in Europe.”
Exponential capital growth
Antler is one of a growing number of VC funds
to establish brick-and-mortar offices in Berlin.
The German Private Equity and Venture Capital
Association (BVK) estimates that there are now
around 70 VCs in Berlin in total, with a substantial number incorporated outside of Germany.

Typically start-ups go where the money is,but now the opposite is the case. The BVK and
Brussels-based Invest Europe calculate that
Berlin’s annual total VC investment volumerose from EUR 109 million in 2010 to EUR 987
million in 2020. Approximately 50 percent of
VC investment in German companies goes toBerlin, dwarfing the amounts raised by Germany’s second and third largest start-up hubs in
Bavaria and North Rhine-Westphalia.

THE BOTTOM LINE
Berlin is Germany’s most significant start-up hub by a huge margin. Domestic and international
entrepreneurs establishing aphysical presence in the capitalwill benefit from proximity to a
new crowd of VC investors.

More to the point, the once-modest financing rounds sought by young Berlin-based
companies have ballooned – these days often
amounting to hundreds of millions. And themain driver of this exponential growth is Brexit.
“London used to be the place to be forinternational VCs, but this is changing, notleast because London-based VCs can no longer
benefit from the significant contributions theEuropean Investment Fund [EIF] shoulders in
the financing of small and medium-sized enterprises,” explains BVK executive board member
Ulrike Hinrichs. “VC investors see the EIF’s
involvement as an official seal of approval foran early-stage target, and the German government’s Future Fund shows that state tailwinds
are also stiffening for later-stage support.”

Established in 2021, the EIF is a European
program aimed at supercharging VC investment in promising young businesses and has
a total of EUR 10 billion to invest up to 2030.
Anglo-American VC discovers Berlin
One fund that recently established a presence in Berlin is UK-founded DN Capital.
In November 2021 it opened an office in the
Mitte district, following the fund’s successful
investments into a slate of German start-ups
including used-car platform AUTO1, vacation-home platform HomeToGo, optical company Mister Spex and restaurant reservation
platform Quandoo.
Another new arrival is Verdane from northern Europe, which opened its Berlin office inlate 2019. In July 2021, Verdane announced thatthe total number of investments supported byits local team in Berlin had risen to a dozen,
underscoring the importance of the Germanmarket in its growth strategy.
Finally, US-based Activant Capital andNetherlands-based Peak opened Berlin offices
in mid-2021. Peak, which focuses on start-ups
in the software-as-a-service (SaaS) marketplace
and platform business models, says face-toface interactions with Berlin’s bevy of start-ups
is important.
“We invest very early in companies, andfor that it is extremely helpful to get close
to the founders as opposed to dealing onlywith them via video calls from Amsterdam,”says Johan van Mil, Peak’s managing partner.
“Berlin is a very dynamic city with a strong
creative and techie spirit, which matches perfectly with our own entrepreneurial
mindset.”Why did Peak set up an office in Berlin?
Typically, we’ll get to know a start-up for three to
six months before we talk about investing in them.
The early-stage investment process is pretty mucha rollercoaster. We rely on both deep data and gut
feeling. To manage the latter, it is helpful to talkface to face. We really want to personally meet thefounders, feel their energy and get to know thepeople who drive innovation in Germany.

Photo: Peak Capital

What can German start-ups expect of Peak?
Peak is fully funded and founded by entrepreneurs.
We bring with us our networks and expertise, as
well as positive and negative experiences. We actively help start-ups with everything they run intolike hiring talent or next-round funding. We leave
our phones on overnight, so we’re there for them.
Another important aspect is internationalization.
If you want to create a real unicorn, you’ll need toconquer foreign markets, not just Germany. While

the size of the German economy makes it easy toscale up a business, it tempts founders to neglect
internationalization. Peak is from the Netherlands,
so through their dealings with us, German start-ups
inevitably take on an international focus.
Will the investment bonanza be over once theworld’s major central banks tighten monetary
policy?
No, it won’t. If benchmark interest rates go up, lessmoney will flow into the stock market. Some ofthat money will flow into the start-up ecosystembecause investors are looking for a healthy return
while solving the world’s urgent need for new technological solutions. We are now experiencing the
emergence of a next-generation start-up scene,as the first and second employees of the likes of
Zalando, Rocket Internet and HelloFresh are now
launching new start-ups or investing themselves.

“BERLIN IS
A DYNAMIC
CITY WITH
A STRONG
CREATIVESPIRIT.”

Johan van Mil, founder and managing
partner of Peak venture capital, is bullish on the investment scene in Berlin.

MARKETS GERMANY | Start-ups

Photo: Holthaus/laif30

Launching a business is a sink-or-swim prospect – all themore so in a foreign country with a different language.
But international entrepreneurs are increasingly braving
the waters in Germany and feeling very comfortable.

»Berlin is not like
San Francisco’s
tech bubble where
people can easily
become out of touchwith real-world
problems.«
Michelle Tian,
Passionfroot»Germany
has great market
potential, which
we want
to use.«»I knew that whatever difficulties cameup, there would be a
support system inGermany.«

Adi Arthanareeswaran,
MeinDoc

Tatyana Eliseeva,
HealthCaters»I know that I canrely on what representatives of German institutions sayand there is a lot of
support. You’ve justgot to ask.«
Arjeta Culaj,
LinksUpMARKETS GERMANY | Start-ups

Today, Tatyana Eliseeva can laughabout her founding story, but two
years ago, things looked rather different. “I was in Berlin with the promise of funding
in one hand and the threat of having to leave thecountry in the other,” remembers the founderof the medtech start-up HealthCaters.
Her now thriving start-up enables healthchecks from home or the workplace and aims
to contribute to the prevention and early detection of diseases. At the time, Eliseeva had beenworking in Germany for just over two years.
“I had difficulty explaining to the immigration authorities that I was financially secure
thanks to a grant from a start-up acceleration
program,” she says. So she reached out to theregional economic promotion organization
Berlin Partner for help. “They handled thespecifications, and I was allowed to stay.”
Born in Russia just nine days before the
USSR collapsed, Eliseeva was raised in difficult
times. “People looked reluctantly to the future,”
she says. “I believe that’s why it is harder forme to take risks.”
But the sense of security Eliseeva felt in
Berlin encouraged her to set up shop there. “Iknew that whatever difficulties came up, there
would be a support system. I wouldn’t want tohave started a business at any other place.”
Entrepreneurial diversity
Germany’s entrepreneurial scene is now conspicuously international. An annual study
by the German Startups Association and theauditing firm PwC found that 7.8 percent of
new entrepreneurs in Germany are not German nationals. According to the study, thosefounders are well educated and an asset to thebusiness scene.
“More diversity brings more productivity,
and a diverse economy creates high-quality jobs,” Germany Trade & Invest’s Trend &Innovation Scouting manager Almut Weigel
emphasizes. “Germany has become a much
more attractive location for foreign founders
in recent years.”
One of the main reasons is government
funding, available through innovation programs
such as the Digital Hub Initiative of the German Ministry for Economic Affairs and Climate
Action. “Twelve Hubs across Germany reflect
local industry specialization,” explains Weigel.

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.

The focus in the Berlin hub is on fintech and theInternet of Things. The big idea is to give startups a leg-up and to locate them where they fit
into the economic infrastructure. The hubs
offer help with networking, office locations
and the opportunity to take part in networking
events or trade fairs.
Indian-born Adi Arthanareeswara and his
Vietnamese cofounders took part in the accelerator program of the Digital Hub in Leipzig. For theentrepreneurs, this support was just one of manyarguments in favor of Germany. Their start-up
MeinDoc simulates medical surgeries to make iteasier for patients to understand their treatment.
“Funding from state-owned bank KfW and competitions like the Innovation Award have helped
us a great deal. You don’t find attractive projects
like this everywhere,” states Arthanareeswaran.
“Moreover, Germany has great market potential,
which we would like to use.”
Anything’s possible in Germany
Michelle Tian, cofounder of the start-up Passionfroot, agrees. Her start-up helps digitalcreators like YouTubers manage their businessmore efficiently by streamlining their workflows on their “drag ’n’ drop no-code platform.”“Germany offers great opportunities because
the entrepreneurial market is not saturated,”
she says. Tian grew up in San Francisco andmoved to Berlin in March 2020. “I came here
from a privileged environment and a great network but never regretted it once.”
She and her cofounders were attracted
to Berlin’s diversity and dynamism. “It’s notlike San Francisco’s tech bubble where people
can easily become out of touch with real-world
problems,” she says.

31

Passionfroot has already raised EUR 3 million
in funding. “I feel like although Germany issuch a big economy and there’s heavy bureaucracy, which can seem unattractive, there’s still
so much potential to grow,” she says.
Figuring out the paper maze
Before foreign founders can start, they mustnavigate their way through a “paper maze”
that will seem alien to them. The federal
system – that divides Germany into many
jurisdictions – can seem complicated, but it
also enables special advantages. Support canbe provided at the point where it’s needed,
for example, as Arjeta Culaj from LinksUp
discovered. “At the beginning it was hard
to know what the first ToDo was, especiallywithout speaking German fluently,” says the
Albanian founder, who has lived in Germany
for eight years.
Like Passionfroot, LinksUp is a businesspage builder that enables “solo-preneurs” tomanage their digital content, but with a uniquedifference: LinksUp has a sales platform for
Non-Fungible Tokens (NFT), which are used toauthenticate original versions of digital content
such as memes or art.
While dealing with the authorities was
tough, Culaj has come to appreciate the thoroughness of Germany’s start-up process. “Iknow that I can rely on what representativesof German institutions say and there is a lot of
support. You’ve just got to ask.” She is the firstto admit that founding a business in Germany
initially seems daunting. “But once you havewalked through the legal process of founding, you’re basically good to go,” she says. She
praises the nurturing approach of the startup scene, where mentoring and networking
events are standard practice. She compares
founding in Germany to receiving a “bear hug”:“A heavy hug that hurts a bit but means extra
well. Anything is possible. You just have to try
to be patient!”

CONTACT
kim.zietlow@gtai.com
GTAI director Trend &Innovation Scouting
www.gtai.com/startups-germany

MARKETS GERMANY | Start-ups

THE FEMALE SIDE
OF FINTECH

Photo: ViDi Studio/Adobe Stock32

There’s a growing demand in Germany for financial investment solutions targeting
women. Start-ups reorienting their financial services and products around female
customers are poised to thrive in Europe’s largest economy.

The view that women are fundamentally more risk-averse than men whenit comes to financial choices is one
Karolina Decker, CEO and cofounder of the
Berlin-based start-up finmarie, can no longer
abide. “Female risk aversion is a cliché,” Decker
says. “As soon as women understand what’s
behind stocks or fund investments, they invest
similarly to men.”
Decker is speaking from experience – having worked in the financial industry for morethan a decade. There are, of course, differences between the genders, which she freely acknowledges. She’s noticed, for instance, thatwomen have different needs and goals anddon’t ask the same questions as men about
wealth accumulation.
“Women often don’t feel understoodand addressed by financial advisors,” sheobserves. “They want transparent communication and a more direct approach.”
In 2018, Decker recognized that women
represented a unique target group and saw
an opportunity, which led to her founding
finmarie. It offers a combination of classic
financial coaching and digitalized asset management specifically for women. In October
2021, the start-up, which she runs with two
female partners, Rica Klitzke and Leitha Matz,received fresh capital of EUR 1.4 million fromtwo financial investors.

THE BOTTOM LINEThe market for digital asset
management in Germany is
growing and one major reason is
new female investors. Start-ups
designing financial services that
focus on women are thriving.

Closing the gap
The example of finmarie is hardly unique. In
2021, fintech and insurtech start-ups in Germany received more than EUR 3.7 billion in
venture capital – more than six times as muchas the year before.
“In 2021, no other start-up industry received as much fresh capital as the German
fintech and insurtech sector,” says Josefine
Dutschmann, senior manager of Business &Financial Services at Germany Trade & Invest.
And the female niche has become increasingly popular. Start-ups such as finmarie, Financery (see FDI Perspective) and others are
benefiting from the rise of financially savvy
women. Female customers not only make up
half of the population, they’re also well educated in Germany and have great spending power.

“There is a shift in diversity and equality taking
place in Germany, and this shift is triggering
female demand for financial products,” says
Decker. For example, the share of women inuniversity-degree-level professions has increased significantly since the 1990s.
Investing for the future
Women are particularly motivated to invest
their money wisely in anticipation of dwindlingpurchasing power as they get older. “Starting
around age 35, financial provision for retirement
becomes increasingly important for women inGermany,” says Decker. She adds that taking
control of their financial destiny and building
up their assets help women look to the futurewith confidence and optimism.
According to a recent study, women accounted for only a third of all company shareowners in Germany in 2021. But Decker says
that’s changing and anticipates great growthpotential in the market. That’s why she’s planning to expand and is currently hiring: finmarie
is seeking talent in the areas of technology, product management and digital security.

CONTACT
josefine.dutschmann@gtai.com
GTAI expert Business & Financial
Serviceswww.gtai.com/financial-services

MARKETS GERMANY | Start-ups

33

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We talk to Germany Trade & Invest’s India director­Seema Bhardwaj and director general of the Indo-­
German Chamber of Commerce Stefan Halusa about
relations between the two economic powerhouses.
Ms. Bhardwaj, you became GTAI’s India
representative in the spring of 2021 in the
middle of the pandemic. How was that?
SEEMA BHARDWAJ: I began my role in the

midst of the second wave. Working from home
and the lack of physical interactions in a newcity was challenging. On a positive note, it gaveme time to register the gradual change in business here. Plus I got to know the peaceful sideof Mumbai! Now as most of the restrictions
have eased – the city is all set to start full steam.
Mr Halusa, you recently took up your post at
the Indo-German Chamber of Commerce.
How do you plan to market Germany as abusiness location to Indian businesses?
STEFAN HALUSA: Germany offers companies looking to expand reliable conditions formaking business investments and a securelegal framework. This makes it an attractive
location. This is how we are marketing it.

of life at affordable prices are the key drivers
for Indian business expansions to Germany.

What sorts of Indian companies are mostinterested in coming to Germany and why?

HALUSA: There are a number of factors behind Germany’s fine reputation in India. It
offers Indian companies a large, affluent market and access to the entire EU. Additionally,
Indian companies respect the great technological know-how of German firms. That makes
them attractive partners, customers, suppliers
and targets for M&A activities.

HALUSA: We see lots of interest in the automotive sector, where access to technology
plays a major role. Also in the IT sector, which
views Germany as a major market. Companies
of various stripes are interested in digitalization. Indian firms have excellent know-how inthis area and the necessary resources that are
increasingly lacking in Germany.

How has corona and the disruption to supply chains changed Indo-German business?

BHARDWAJ: In addition to digital infrastructure, artificial intelligence and robotics, life
sciences, health and pharmaceuticals, energy
and environmental technologies, and finally,e-mobility are the emerging areas of interest.

HALUSA: Trade and investment have remained stable but are not very dynamic. Germany is always number six or seven among
India’s trading partners, but the potential ismuch greater. To exploit it, the two sides needto push for the resumption of the EU-India
trade and investment treaty negotiations.
This was agreed last May, but no talks havetaken place yet.

How do Indian companies see Germany?
BHARDWAJ: The pandemic has led Indian
BHARDWAJ: As a leading high-tech solution
provider, Germany enjoys an excellent standing here. Germany’s innovative power backed
with strong R&D, first-class infrastructureleading to high productivity and high quality

The liveliest sectors
for German-Indian cooperation,according to Stefan
Halusa and Seema
Bhardwaj, include IT,
robotics, life sciences,cleantech and e-mobility.

businesses to recalibrate their supply chains.
Resilience is the critical factor as companies
diversify their investments and sourcing requirements. There is a gradual shift here toward
integrating Europe into supply chains.

Photo: Germany Trade & Invest

GERMANY’S “EXCELLENTSTANDING” IN INDIACONTACT
seema.bhardwaj@gtai.com
Director India, Germany Trade & Invest
Stefan.halusa@indo-german.com
Director General, Indo-German Chamber of Commerce
gabriela.heinrichs@gtai.com
Executive Unit Strategic Partnerships(GTAI) and liaison to the German
Chambers of Commerce Abroad

How Germany WorksDECENTRALIZATION
Germany is a decentralized confederation of regional states like the
US and not a centralized politicalentity like the UK or France. While
Berlin serves as the national capital, administrative and economic authority is spread across thecountry. This structure has its
basis in history: The first modern
German nation-state was formedin 1871 from dozens of states, fromPrussia and Bavaria right down tosome very small duchies. After theSecond World War, the new Fed-

eral Republic of Germany made a
conscious decision to give power
to its regional states, now numbering 16, as well as to districts, towns
and villages. They have their own
structure and funds for promoting
business, and foreign companies

coming to Germany will inevitably deal with them. The result isthat economic clout in Germanyis spread more evenly throughout
the country than in other nations
whose capital cities tend to dominate.

CONGLOMERATESIN EVERY CORNERSPREADING THE WEALTH
Large German cities and their share of national GDP – compared to capital cities in other
European countries

Five out of the 16 regional states are home
to an HQ of one of Germany’s 10 largest
companies.

Hamburg 3.6% Warsaw 12.7%

Berlin 4.5%
Düsseldorf 1.5% London 22.7%

Madrid 19.3%

Lower Saxony:
Volkswagen (Wolfsburg)

HAMBURG

Cologne 1.9%

Baden-Württemberg:
Daimler, Bosch (Stuttgart)

Rome 9.2%

BERLINDÜSSELDORF
Frankfurt 2% Brussels 18,2%

COLOGNE

Bavaria:
BMW, Siemens (Munich),
Schaeffler (Herzogenaurach)

FRANKFURT

Munich 3.4%

Paris 10%

MUNICH

Berlin:Deutsche Bahn

AN AIRPORT IS NEVER FAR AWAY IN GERMANY
German airports ranked by number of passengers (monthly, November 2021)
Frankfurt 2,897,928
Munich 1,590,549

Berlin 1,216,817
Düsseldorf 831,213

Hamburg 602,763
Cologne/Bonn 419,692

North Rhine-Westphalia:
Deutsche Telekom, Deutsche Post (Bonn),
Bayer (Leverkusen)At your service!

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Sarah Gholiha
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Alexander Walter
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