Founders call for better political framework conditions in the crisis.
(Photo: Jason Goodman on Unsplash)
Berlin While the year 2021 was characterized by new financing records for start-ups, this year brought a lot of disillusionment. According to calculations by the data service provider Refinitiv, from January to November only around eight billion euros flowed from venture capitalists into German start-ups. In the entire previous year, the investment volume was almost twice as high.
Difficult times for founders who have to assert themselves in Germany and the international market and are dependent on reaching profitable zones faster than in the past. Where the motto used to be growth at any price, it is now about who can make profits as quickly as possible with their business model.
In this difficult market environment, the voices calling for better framework conditions for start-ups from politicians are getting louder. The chairman of the start-up association, Christian Miele, spoke to the Handelsblatt about three central points that could be decisive for the coming year:
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The pressure on the traffic light government is growing to follow up the start-up strategy presented in July with action. Many of the projects are still in the planning phase or, from the point of view of the founders, do not go far enough to improve the political framework.
No language tests and more digital visas
Technology-related start-ups in particular are dependent on the influx of foreign skilled workers. So far, however, many have complained about complex visa processes and bureaucratic hurdles that make Germany unattractive as a destination country.
At the end of November, the federal government decided on the key points of the new immigration law for people from non-EU countries. The main concern is to simplify the influx of skilled workers. From the perspective of the start-ups, however, many of their concerns have not yet been taken into account in the planning.
>> Read here: From deportation to “turbo naturalization” – these are the reform plans of the traffic light
Magdalena Oehl, deputy chairwoman of the start-up association, demands that the language certificate should not only be omitted for immigrants from the IT sector, but in principle. “English is often spoken in startups, it simply does not correspond to the economic necessity of insisting on a language test in the visa process,” says Oehl.
She criticizes: “Start-ups are slowed down by lengthy visa procedures. Some don’t recruit from countries like Indonesia anymore because it takes 12 months for applicants to get their visas there.”
From the point of view of Hanno Renner, co-founder of the personnel service provider Personio, it is crucial for the federal government to digitize “all necessary processes in the visa procedure” and thus speed them up.
European fund missing so far
For companies that have already taken the first steps and need more money to grow, the European financing landscape has so far provided little support. The European Tech Champion Initiative (ETCI) should change that with one billion euros.
The ETCI goes back to a proposal by the French government, German start-ups should also benefit from it. But not much has happened since the announcement in February. According to the Federal Government, the precise structure of the fund is currently being worked out with the participating EU member states and the European Investment Bank Group. It is still unclear when the money will be available for the start-ups.
Overall, the start-up association expects a lower funding volume in Germany in the future due to the tight budgetary funds of the federal government. A factor that could exacerbate the tight financing situation due to the crisis.
Digitization of administration is a long time coming
Non-digitized processes remain the greatest challenge for start-ups when dealing with the authorities, although it has been said that it has been possible to set up companies online since August. In practice, however, many processes and applications still require going to the office. The goal of founding a start-up in 24 hours is still a long way off.
The traffic light also leaves open the question of how to proceed with the online access law, with the help of which administrative services are to be digitized. The presentation of a key issues paper on how exactly the announced Online Access Act 2.0 should be designed will probably be postponed to next year.
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