What 3 things need to be done about Frankfurt’s startup scene?

Why is it that the Banking centre of Germany is not the Fintech startup center of Germany? I am a big fan of Frankfurt and an investor in startups who wants to help put Frankfurt on the map of relevant startup hubs of Germany. As a person genuinely interested in social media’s role in promoting startups and entrepreneurship, I have found two articles that shed some light into the current situation and what can be done.

Frankfurt frustrates the Fintech startups

The first article by FAZ is based on Bloomberg’s interview of people familiar with the startup scene in Frankfurt: Frank Niehage from FinTech Group AG, Anders Hackethal from E-Finance Lab, Martin Hillmich, Frankfurt School of economics, Markus Frank from City of Frankfurt, Jochen Siegert from Traxpay and Maximillian Voigt from Gruendermachine.com. They list four main problems that make Frankfurt a less attractive city for startups. The existing banking sector pays higher salaries than the startups can compete with, high cost of living, conservative cultural atmosphere and last but not least the lack of IT skills among the financially knowledgeable employees. Startups establishing in Frankfurt have a hard time competing against Berlin due its perceived high cost of living and non-hip vibe. Frank Niehage has been discussing with universities to create a dual study and training program for young people that would combine the two banking & finance with IT & programming knowledge.

The global ecosystem ranking 2015 The second article is by Compass, a San Francisco-based benchmarking software company has published a report that identifies the top 20 startup “ecosystems” in the world. The report ranks cities in five categories: performance, funding, talent, market reach, and startup experience. The German city Berlin has made it on the list and was ranked 9 up from 15 (2012). What Berlin has is a well functioning ecosystem that consist of:

  • The A team: the accelerators and the angel investors, they invest not in ideas but people. Vast majority of investments are made via trusted human relationships or networks therefore investors and founders need a well functioning local ecosystem to find each other.
  • Right personality type: right combination of vision and execution, risk taking profile and fear of failure motivation, leadership qualities and listening skills to be successful on a small startup team.
  • Talent that is needed for startups is rare, even in Silicon Valley 70% of the software developers are foreign born.
  • Single Geography you need face-to-face contact to be creative and sitting around the same table enables you to sort out all the issues.
  • Different inputs: such as access to customers, possibility to structure usability sessions, access to mentors who’s role is vital and increases the chances of success of a startup substantially. The culture and people that encourages startups.

 

What 3 things does Frankfurt need to do before it is too late?

  • Establish a functioning ecosystem by supporting accelerators to help startups refine their business ideas and facilitate the contact with investors.
  • Create a culture of innovation and creativity by encouraging sharing of ideas and knowledge in the form of seminars, startup pitching events and hackathons
  • Ensure talent for startups by focusing the education on skills needed: entrepreneurship, IT and programming

 

Summary

As the compass report puts it, even if it is not proven that a good ecosystem improves the success rates of each startup individually, it does enable production of vast numbers of startups by facilitating each step of the process. As the success rate of startups is low, one needs to produce them in quantities. Many of them will be successful and some of them will make us dream of IPOs.

About the Author

Maria Pennanen

Maria is ranked top fintech influencer in the DACH region. She is an investor and CEO of monetizationAI, a FashionTech startup. She is an experienced manager with 20 years of in-depth experience in B2B sales and marketing within Europe and Asia where she developed a passion for learning and profitable growth. She is a qualified executive coach educated in INSEAD. She is involved in numerous German, Finnish and Israeli start-ups and invests in SAAS and Fintech startups.

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Samstag, 23.01.2016 by Maria Pennanen
https://www.acceleratorfrankfurt.com/wp-content/uploads/2018/08/ram-FFM.jpg
This Wednesday 20.01.2015, Fintech Meetup in Frankfurt gathered a record crowd of some 170 startup enthusiast at the co-working premises of Die Zentrale, hosted by Felix Scheffka and Yassin Hankir. Those who could not be there could enjoy it streamed online by Startupradio.de.