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Attracting and Retaining of Start-ups from third-countries , , Study by EMN Germany for the European Migration Network
Source: BAMF
This EMN study focuses on the requirements for setting up a start-up as well as the general support instruments in Germany. The focus is on entry requirements as well as the specific funding instruments for international start-ups at the federal and Land level.
The number of start-ups in Germany has risen significantly in recent years. 70,000 start-ups were counted in Germany in 2019, compared to 54,000 three years earlier, although no information is available on how many of the start-ups are founded and managed by third-country nationals.
General start-up support measures in Germany
Reasons for the increase in the number of start-ups include the significant expansion of general government support programs and a dynamically developing private-sector support landscape. Recently, the general state funding instruments have also been diversified with regard to the various start-up phases. According to studies, however, state support programs for the late phase of start-ups are still expandable in an international comparison.
While the instruments of the federal states usually aim at attracting and retaining start-ups in the respective federal Land, the federal instruments aim at facilitating the basic structural framework conditions for start-ups in Germany. This applies, among other things, to offers of start-up financing and consulting, but also to the promotion of the economic internationalization of Germany as a start-up location. This EMN study lists a large number of general support programs offered by the Federal and Land governments and presents them as examples.
Sectors and ecosystems
The most important sectors for start-ups in Germany are IT and software development, but also industrial technology and hardware development, e-commerce and online marketplaces. Berlin is the most important "start-up ecosystem" in Germany for many years in terms of the number of start-ups and investments made in start-ups. The capital city is also one of the top 10 global "start-up ecosystems" with highly dynamic growth in global rankings. Other important "start-up hubs" are Brandenburg, the Rhine-Ruhr metropolitan region in North Rhine-Westphalia, Frankfurt, Munich, Stuttgart/Karlsruhe and Hamburg. The German government supports the development of start-up hubs, for example through the Digital Hub Initiative, which promotes twelve regions and 16 cities as digital ecosystems.
Attracting and retaining international start-ups
As a rule, the general start-up support instruments are also open to non-European start-ups. In practice, however, there are sometimes indirect access restrictions for start-up founders from third countries, as they are subject to entry regulations. This makes it particularly difficult for them to gain access to early-stage funding. The recruitment of non-European start-ups through specific funding programs has so far played only a minor role in the state funding landscape. In addition to general location marketing, there are individual support instruments at the Federal and Land levels that directly or indirectly aim to recruit start-ups from third countries. However, to date, these are mostly limited to a few partner countries or specific "start-up hubs" in the world (including the federal programs "German Israeli Startup Exchange Program", GISEP, and "German-Indian Start-up Exchange Program", GINSEP).
Target group-specific start-up scholarships and internationally oriented start-up competitions are additional instruments that have been established in some federal states. There are also a few multilingual information and consulting services on the general conditions of entry and start-up in Germany.
Challenges attracting international start-ups
Even though Germany as a location for start-ups has developed dynamically in recent years, various challenges can be identified that may arise when attracting non-European start-ups to Germany. This concerns among others
- hurdles under residence law, such as the often perceived as complicated procedural steps and conditions for granting a visa or a residence permit for the purpose of self-employment,
- the often long waiting times when applying for a visa,
- the low systematic multilingualism of information platforms and advisory structures for start-ups from third countries,
- an increasing lack of transparency in the meanwhile diverse regional and nationwide start-up funding landscape,
- an inconsistent definition of the term "start-ups", which makes it more difficult to measure the efficiency of the corresponding funding instruments, and
- making it more difficult for third-country nationals within Europe to expand or start up a new business beyond national borders, as in some cases new procedures have to be followed.
Parallel to the national study, the comparative publications of the EMN provide an EU-wide perspective on the framework for start-ups in the single EU Member States: the detailed EMN Synthesis Report, the concise EMN Inform and the one-paged EMN Flash (see "Downloads" under "Further information").
The Study was drafted by Janne Grote in cooperation with Dr. Ralf Sänger and Kareem Bayo