Mad about Munich: The Rising Star of Germany’s Startup Scene
By Dr. Ricardo Schaefer & Jonas Kern
Over the past decade, the German startup landscape has witnessed a remarkable transformation, shaking the foundations of what was once a Berlin-centric empire. Today, the throne of innovation in Germany is being challenged by dynamic cities on the path to becoming major startup hubs. Among these contenders, Munich has emerged as a formidable rival, wielding a few key advantages that give it a fair shot at matching Berlin’s supremacy if not claiming its crown entirely.
Book Smart: Where Knowledge Meets Innovation
Nestled amidst the headquarters of high-tech giants, industrial behemoths, and DAX-listed titans, Munich is a fertile ground for nurturing innovation. The Center for Digital Technology and Management (CDTM), a joint venture of the Technical University of Munich (TUM) and the Ludwig-Maximilians-Universitat Munchen (LMU), offers a specialized Technology Management program tailored to equip young entrepreneurs with the essential knowledge and skills needed to build and lead thriving businesses.
But that’s not all — these technical universities boast a plethora of accelerator programs, funds, and grants, nurturing both students and the ecosystem itself. The impressive alumni network at CDTM includes some of Germany’s best company founders, luminaries like Hanno Renner (Personio), Veronika Riederle (Demodesk), and Michael Wax (Forto). This gives a big advantage to fulfilling Munich’s mission and provides an answer to the common question: Why do unicorn founders so rarely study in Berlin?
As Prof. Dr. Helmut Schoenenberger of TUM recently shared at the DLD AI Summit that my colleagues attended in Munich, an astounding 15,000 of the university’s 50,000 students are studying computer science. And of those 15,000, an equal split decide to pursue the path of programming and academia while the other half go on to become entrepreneurs and innovators. Moreover, TUM has the highest concentration of AI founders in Europe at TUM, making the university a unique breeding ground producing the future leaders and innovators of Germany. Given what a turning point we are in the technological revolution around the world, I believe these incredible statistics regarding the future workforce of the nation are one of the biggest predictors for the future success of the country.
Relationships, Relationships, Relationships
Unlike Berlin’s sprawling metropolis, Munich’s cozy confines foster a close-knit environment that is a networking goldmine. This tight community serves as a unique incubator for building powerhouse founding teams fresh out of university. Ranked among the world’s top cities for talent acquisition and retention by the Global Talent Competitiveness Index 2021, Munich attracts a diverse pool of talent from corporate giants and academic institutions alike.
The combination of tech titans including Apple, Google, Accenture, and others headquartered in Munich, alongside Munich-born success stories including the likes of Celonis and Personio, a vibrant ecosystem has emerged with an alumni network that rivals Berlin’s.
Yet, scaling a team in Munich can be a double-edged sword. As one of Germany’s most expensive cities, Munich offers top-tier salaries, which can be challenging for early-stage startups to offer. Yet those who have been able to attract substantial funding and can pay top dollar for tap talent, will be rewarded by having the pick of the litter of a high qualified and motivated workforce.
Funding & Investing: Munich’s Financial Oasis
Building a successful startup requires access to capital, and, luckily, Munich has got you covered. The city is overflowing with venture capitalists eager to fuel its entrepreneurial fire. The German Startups Association revealed that, in 2020 alone, Munich-based startups received a staggering €1.3 billion in venture capital funding, demonstrating a very strong investment ecosystem. On top of that, Sifted reported that Munich surpassed Berlin for the most startups founded per 100k inhabitants in 2022, showing a strong pipeline of new companies entering the ecosystem.
Since 2015, Target Global has been one of the most active players in the German ecosystem, backing the largest number of unicorns in the country, including Berlin-based startups Wefox, Grover and Delivery Hero. Over the years, the firm has also set its sights on Munich, investing in startups like Demodesk and actively supporting the ecosystem through conferences and networking events. In October 2022, Target Global’s Berlin team hosted a networking brunch where the 2022 cohort of CDTM students were able to learn about the ins and outs of venture capital, the challenges of fundraising, and the importance of team building. And this past August, Target’s team hosted a dinner where they brought together Munich based founders to have an intimate conversation on what’s next for the city’s burgeoning tech scene.
Later this month, our partner Dr. Ricardo Schaefer will take the stage at Bits and Pretzels alongside Maximilian Shroeren, co-founder of our portfolio company Enter, to talk about how making our homes carbon-neutral can become a reality for everyone. It’s been incredible to witness what an important and special community Felix Haas has built for start-up enthusiasts over the years and we are proud to take part in it annually.
What Can Other Cities Learn from Munich’s Success?
In Germany, a diverse array of hubs, universities, and attractive cities have sprouted, unlike the French model, where Paris reigns supreme according to Sifted. Munich’s accelerator programs, including TUM Venture Labs, offer tailored support for founders, demonstrating the potential for other cities to launch similar initiatives. Collaboration between enterprises and innovative startups, exemplified by institutions like the Munich Urban Colab, showcases a win-win scenario that fuels both innovation and growth.
In conclusion, launching a startup in Munich opens the door to boundless opportunities. Its central location facilitates network expansion and international market exploration. Munich’s rich talent pool, coupled with its innovative spirit and access to capital, makes it a fertile ground for groundbreaking ideas.
If you’re a founder building the next big thing in Munich, we’d love to hear from you.
Munich is rising, and it’s time to be part of the journey.
