Germany’s economy relies heavily on traditional businesses, a future for Start-ups has a positive outlook post-COVID 19 era.

Many economies around the world are now opening themselves after months of lockdown. Germany, Europe’s largest economy and financial capital is now planning out to recover from this financial loss, which the country has encountered post World War II. Even when the Subprime crisis of 2008 scourged economies around the world, Germany’s well-planned management remain unaffected. Now, since the global economic loss is viewed much larger than that of the Sub-Prime crisis, Germany is observing a changing landscape in the Post COVID 19 world.

“We are playing for time.” this was the statement made by German Chancellor Angela Merkel, when WHO chairperson Tedros Adham Ghebresyesus, categorised COVID 19 outbreak as a pandemic. Since then, the German authorities are planning out strategies to boost the economy post-COVID 19. Germany was the first European country to announce a post-COVID 19 outbreak stimulus package accounting for 130 billion euros or US$146 billion.

The Merkel’s Plan

In March, when the COVID 19 outbreak was just emerging the government approved a package of 600 billion euros or US$660 billion to prevent the country from economic collapse. Since then, many plans and regulations have been laid out, to restore the German economy.

Some of the key highlights are-

• 100 billion-euro fund approved by WSF economic stability fund to buy out or invest in companies if needed. Similar funds can be set up for safeguarding the local champions.
• The government authorities are extended with taking control for blocking any foreign purchases for “Potential Interference.” This was done by paying US$9.8 billion for bailing out Deutsche Lufthansa AG.
• Merkels’ chief of staff has asked the government authorities to invest in technologies such as Artificial Intelligence, Battery Cells and Clean Energy for nurturing homegrown global players. This has come to be known as “Made in Germany: Industriestrategic by 2030”.
• Reducing the vat by 3 points, thus giving up tax revenue to some 20 billion euros.

Hope for the Startups

Germany is home for many international ventures such as Volkswagen, N26, Zalando, HelloFresh, Soundcloud and BMW. It is a breeding home for start-ups, European Entrepreneurs and Venture Capitalists. Berlin was ranked 10th position in the 2019 Global Ecosystem report, thus making it a suitable place for flourishing entrepreneurial businesses. That’s why Venture Capitalists are having a positive outlook for the upcoming start-ups in the post-COVID era.

In an interview with Techcrunch, Jeannette zu Furstenberg, the founding partner of La Famiglia, said that despite the recovering German economy, a positive indication can be observed amongst portfolio driven companies that quickly adapt and provide features that cater to the current needs. She says that venture capitalists are now looking for technologies that can perform repetitive and tedious tasks which were done by humans, so that focus can be on something that is meaning and would create an impact in interpersonal activities.

Jeanette observed that over the past few years, many new leaders have developed and grown in Berlin and other German cities, owing to the relatively low cost of living in tech hubs and large local incumbents with massive capital to invest and spend. As the German economy is fighting back together with solutions, she has hope that new goals would be achieved with this approach.

She says that Venture Capitalists are looking out for Visionary founders who would tap into giant industries with a high potential for digitization across Europe and the US. Jeanette also told that as Germany’s economy is governed heavily with wealthy traditional companies, new start-ups can make maximum use of it. She says that this was the case before 2020 and posts COVID will have an increase in demand and accelerated innovation across traditional industries ranging from automotive, manufacturing, to the chemical industry.

Thus in the long run, and with an emphasis already laid out by the Merkel government for promoting traditional businesses, the outlook for start-ups in Germany is positive.