Hinterland of Things: "Startups can make Germany's industry strong"

Although gross domestic product is currently falling, start-ups can save the economy. Dominik Gross, co-founder and managing director of the Founders Foundation (FF), which trains tech start-ups, is certain of this. At the "Hinterland of Things" conference, with which the FF aims to bring start-ups together with companies and investors, he raised whether we need to compare ourselves with the seven tech giants (Microsoft, Apple, Nvidia, Alphabet, Amazon, Meta, Tesla) from the USA. They dominate the global market with a valuation of 14 trillion US dollars. Nvidia alone has a higher market valuation on the stock exchange than all DAX companies combined. In Germany, "the majority of companies are actually not listed on the stock exchange", instead there is a strong SME sector. This makes for a different economic structure overall.

While California is home to Silicon Valley, East Westphalia-Lippe (OWL) is home to a "terminal valley". The region is home to many companies that manufacture connectors, connector systems and the like. "They are in every power plant, in every machine, in every generator," said Gross. Phoenix Contact and Wago are among the "hidden champions", unknown companies from Germany that contribute to economic value creation worldwide. Other unknown, but nevertheless high-turnover companies include Isringhausen, Hettich and Sollich, but Bertelsmann, Claas, Melitta and Miele also come from the region.

Robotics is a big topic

Germany is big in the industrial tech sector. "26 percent of our gross domestic product is generated by the manufacturing industry". The majority of processes can be automated. "Robotics is a huge topic here," says Gross. Solutions are offered by start-ups such as Neura Robotics and Unchained Robotics.

As an example of start-ups in the field of climate tech, Gross cited Voltfang, which has developed a battery storage system that can be operated with discarded batteries. This is interesting for companies that want to know how much stored energy they can still use. In the field of e-commerce, the startup "Vision AI" wants to automate processes in online stores with the help of visual and semantic AI models and advertise better than Amazon. To achieve this, an AI analyzes product images and generates recommendations for buyers.

The success of the Heidelberg start-up Aleph Alpha should raise hopes. According to McKinsey, generative AI can increase labor productivity by 0.1 to 0.6 percent per year. "Germany will become one of these beneficiaries because we have precisely this developed industry that can benefit from it and we actually have the top talent coming out of the universities that can develop AI," explains Gross. Many of these technologies are not new, but according to a recent Bitkom survey, AI is also playing an increasingly important role for start-ups.

Get your hands dirty more

According to Verena Pausder, Chairwoman of the Startup Association, Germany should not "chase after the big AI games" and try to produce a German version of TikTok or Microsoft, but instead focus on its strengths, for example in the area of research. Together with the industrial base, it is the perfect starting point for deep tech. "ESA, Aerospace, The Exploration Company, Marvel Fusion, Quantum Computing, these are the things where we can be world leaders. And that's why we have to take on these big challenges. And this match between SMEs and start-ups is ideal for this",

The "Germany is doing away with itself" narrative is "energy-sapping" for Pausder. She also referred to questionable interviews with business leaders who predict a bleak future. "We need to dare to get our hands dirty again," says Pausder. "If we simply stand in front of this huge mountain of challenges and ask: 'How is this actually supposed to work? [...] We now need the feeling that we have all the ingredients in this country to be successful," said Pausder.

(mack)