Bringing value into the German market

Dr. Stefan Franzke, CEO of Berlin Partner for Business and Technology, on the importance of startups for the German economy

When you found a startup, it is very important not to be alone so you can reach a diverse environment. Berlin can provide the access to all the necessary connections – Dr. Stefan Franzke

The interview with the CEO of Berlin Partner for Business and Technology Dr. Stefan Franzke was held in 2017, on the occasion of the ceBIT 2017 at Deutsche Messe. He spoke with local global about methods to nurture the startup ecosystem, which again brings value into the German market.

Dr. Franzke, due to your experience in working with startups, can you shortly describe the environment on this matter in Berlin?

I would start by saying that Berlin has a very vibrant startup ecosystem, there are between 4.000-6.000 startups which are younger than 7 years and they have an innovative and scalable business. Also, what is important to be mentioned is that every year, 350 to 600 new startups are founded in Berlin or they are coming from abroad to Berlin. This is because there is a situation where the talent decides where the business is established.

The talent nowadays decides to locate in Berlin because of the vibrant scene and the unlimited opportunities. Berlin is characterized by being very international, well, there are 190 different nations and this is very impressive because this is not really common in other parts of Germany. We can say it is common for Berlin but not for the other 51 regions.

The talent nowadays decides to locate in Berlin because of the vibrant scene and the unlimited opportunities

What exactly are the arguments for the location? Is it just the renting space or can you maybe give more examples about the reasons why young people are choosing Berlin over other cities around the world?

First of all, as previously mentioned, it is the very vibrant ecosystem and society, if you compare Berlin with other capital regions worldwide. Yes, we do have the cost advantage but this is not the real aim why the people are coming. They are coming because we are open minded. In those days where the nationalism stands against globalization, you find in Berlin a society where open minded people and so many nationalities are really welcomed and beloved.

Another driver is that we have history; when you found a startup is very important to not be alone so you can reach a diverse environment and Berlin can provide the access to all the necessary connections. In this way, you get known among the clients, suppliers, investors etc. much faster. Another reason is that Berlin has excellent universities and every year 60.000 students graduate with a Bachelor or with a Master’s Degree. This is very attractive not only for startups. This is also appealing to the established industries because, if they are located in Berlin, it will be easier for them to be contacted by the startups- in this way you find your clients in the city. This makes Berlin very vibrant with over 100 working spaces and over 80 different accelerator programmes in the city.

Does this incoming business also from the major IT companies or manufacturers (e.g. Daimler) have an effect on what once was called the labor market or let´s say, are there enough developers to cover the demand?

We do a lot to change the labor market. Ten years ago we had 20% unemployment rate, last year we had under 10%. Unfortunately, there are some people with education who are head hunted from abroad and those are the software engineers. We have a very big competition between the manufacturing companies. For example, an unicorn like Zalando has only in Berlin 6.000 employees and I think 4.000 of them are software developers, so there is a really strong demand. That´s why we are offering some services for our clients: the startups and the established manufacturing companies. We offer the so called business immigration service because we know that finding talent from abroad, even from outside the EU is very necessary. If, for example, an incoming talent wants to sign a contract but in order to be employed they need a visa and/or working permission, we can organize that in 5 working days and this is unique in Europe.

We offer the so called business immigration service because we know that finding talent from abroad, even from outside the EU is very necessary

Another thing is that we are going abroad, to New York, to Tel Aviv, to Paris, to Shanghai in order to make Berlin attractive. Not only to establish new businesses but to offer the talents from those places the chance to find the right company in Berlin through our brand Start Alliance. So, on the one hand we offer this in Berlin because we have global players like Microsoft, Cisco, SAP in the city. This way, the startups can have the contact in Berlin and can build their network in Berlin with those companies. On the other hand, we go abroad, we organize delegations trips for a year already through the Starting Alliance product.

Those are our instruments to build bridges into the foreign market in order to help, to find the right information and to get the right content. Because it is the same when you are going to New York, Paris and China: you have different cultures, you have different ways to do business and different ways to raise money, to find clients and customers and this is what we want to offer by having all those connections in the startup ecosystems worldwide.

Japan is the partner country at CeBIT 2017 and, because you’ve been recently to Osaka, can you share a little bit your impression and how Japan is doing in this field?

You are right, three weeks ago I was in Osaka. I knew that Japan is a really strong industry location but I was wondering if there are startups in Japan that are really competitive and innovative; And yes, there are. It is a really vibrant startup ecosystem.

What we see is that society is getting older and older, and we see also the society from Germany getting there in 10 or 20 years. For this matter, the Japanese have really amazing solutions for Smart House holding things and they interpret smart cities in another way. I think they offer a lot of solutions for the German society or for the European market and I am looking forward to connect the startup ecosystem from Berlin with the Japanese market.

Of course, it´s not easy to do this, first because the language is a real challenge. When we conducted a research through the German startups, we got 100% or maybe 99% results that the biggest market for Germany outside Europe is, first, the USA and, second, Asia. When we talk about Asia, most of the interviewed companies focus on Shanghai because Shanghai has over 24 million inhabitants and if you compare it to Japan, where Tokyo has a population of 15 million, well, it is easier to go to the Chinese market because it is bigger.

The Japanese have really amazing solutions for Smart House holding things and they interpret smart cities in another way. I think they offer a lot of solutions for the German society or for the European market

If there is any startup interested in locating in Berlin, what is your recommendation, the first steps to do, what is needed to be done in order to have a successful starting point?

The very first step: Come to me, come to my colleagues, come to Berlin Partner. We have the economic development agency, we can talk about the business plan, we can find what are the people´s needs, maybe the growing network in Berlin, maybe we can connect them with the Berlin startup ecosystem. We can give them hints where the best place to locate is, where we have a location service. We can name the best place maybe to rent an own office or, if the interested startup needs financial advice, we can provide them with that as we have a very strong network in Berlin and not only. Because of our worldwide partnerships we can offer so many alternatives, we are talking to startups to see what we can do and how can we help them become successful.

After graduating in mechanical engineering from the University of Hanover, Dr. Stefan Franzke became the Managing Director at the Institut für Integrierte Produktion in Hanover. As the Head of the Innovation Center Lower Saxony – beginning his duties there in 2003 -, he intensified his know-how in in the field of strategy consulting for innovations and key technologies and advised international investors in their relocation process. Additionally, as the Managing Director of Innovatives Niedersachsen GmbH, he was responsible for the national and international marketing of the federal state starting in 2006. Today, he is CEO at Berlin Partner for Business and Technology.