Why Germany should provide more support for founders with a migration background

Founders with an immigrant background still have a hard time in Germany. Yet they bring a lot with them that would enrich the German start-up landscape.

Let's take the major start-up success stories of recent years. First, there was Biontech: The biotech start-up from Mainz was the first Western company to develop an approved mRNA corona vaccine, and the founding couple Ugur Sahin and Özlem Türeci were subsequently showered with awards. Not showered with awards, but showered with lots of money, was Kagan Sümer, who scaled up his food delivery service Gorillas in a very short time. And Delivery Hero was the first (former) start-up to make it, at least temporarily, to the Dax, led by Niklas Östberg.

All these founders have something in common: an immigrant background, either in previous generations like Sahin, Türeci and Sümer, or personally, like the Swede Östberg. These examples show: Founders with a migration background are not only present in the German startup scene, they are also extremely successful.

So can the industry here serve as a model for the rest of the German economy, where such personalities still often have a hard time rising to the top? Unfortunately, it's not quite that simple. In fact, there is still some catching up to do here as well. 21.5 percent of founders in Germany have a migration background, as the Bundesverband Deutsche Startups (German Startups Association) found out in its Migrant Founders Report 2022, which the organization published together with the Friedrich Naumann Foundation. A respectable figure. However, it is still below the 26 percent who have a migration background in the overall population, according to the Federal Statistical Office.

Alexander Hirschfeld, head of research at the Startup Association, has identified three problems that still make life difficult for founders with an immigrant background in Germany, especially those who have immigrated here themselves. "The first barrier is language, I think that's self-explanatory," he says: "Secondly, there are bureaucratic hurdles and thirdly, a lack of networks." By bureaucratic hurdles, he means, for example, obtaining a work permit or applying for funding. "This is predominantly only possible in German, which naturally slows down people who want to come here and start up," he explains. The lack of networks, in turn, was directly reflected in the funding of Migrant Founders' startups. "Fifteen percent of them got venture capital, according to our survey, as opposed to 20 percent of startups overall," Hirschfeld says.

By creating such hurdles, Germany is failing to leverage the great potential that lies dormant in this community. Founders with an immigrant background not only have a higher proportion of academics, they are also significantly more willing to take risks than their counterparts without. They are more likely to want to work with venture capital and they have more ambitious goals when it comes to exit amounts, as the Migrant Founders Report notes. And they also tend to recruit their labor more internationally than other founders. On average, about 50 percent come from abroad. The potential talent pool for companies of migrant founders is therefore larger, and the chance of finding highly qualified specialists is higher.

Prospective founders who are looking for a possible location in Europe but have no special relationship with Germany could be lost in this way. London, for example, is much more attractive for this group, Hirschfeld says. "Everything there is in English, which makes it easier to get started," he says. Strong start-up locations such as Berlin or Munich, which play at the top internationally, would have to adapt their offers here if they want to remain competitive. So: simplify applications and, if possible, offer them in English.

The scene itself can also do something, for example through support services and networks. There are initial projects: the Vision Lab from venture capitalist Earlybird, for example, a six-month program that Earlybird uses together with partners to promote founders with a migration background, or 2Hearts, a network that brings together tech entrepreneurs across Europe.

So the awareness seems to be there. The gap between founders and the overall population, it may be closing. And who's to say whether the remaining five percent won't be the new Biontech.