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Germans don’t do tech startups – more access to capital might change that

qz.com

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Re: Germans don’t do tech startups – more access to capital might change that

#81

Post by zenovision »

Germany has a lot of drawbacks to be the next silicon valley:

* the most difficult tax system in the world. even freelancers have to use accountant services, because most people will not be able to pay taxes properly without it.

* high taxes - 42% income tax + Solidaritätszuschlag 5.5% = 47.5%; for corporations it's ~30%.

* A LOT of buerocracy. I can't even send an email to tax authorities in my area, because they only accept paper letters but nothing else.

* highly qualified foreigners have to learn German and it's quite difficult language.

* the market in Germany is much smaller comparing to USA. If you want to target EU, then you have to support a lot of different languages, date/time formats, regulations and laws etc.

* recently the EU introduced a lot of additional regulations for internet companies (GDPR, new copyright directives that require checking uploaded files, etc...).

* weather is not that appealing as in the valley.

* the difference in salaries between regular developers and rockstars is very low. So there is zero motivation to become one.

* low salaries for software engineers. The most of senior software developers will earn 50.000 - 60.000 EURO anually and after paying taxes it's only ~2.600 EURO per month (3.000 USD)

* poor internet connection in a lot of places / poor connection speed - almost any country is better in this regard

Re: Germans don’t do tech startups – more access to capital might change that

#82

Post by maze-le »

mk89 wrote: post #77
maze-le wrote: post #44

Earlier quoted context omitted.

Exactly, I've worked in 3 companies in Germany that you might call startups without venture capital. I think it is also a cultural issue, with investors and founders alike. Its like, a small company with an independent revenue stream and a small but reliable customer base is worth more than artificially (VC-)inflated companies, that might make it... one day... maybe.

> is worth more than artificially (VC-)inflated companies, that might make it... one day... maybe. For who? It's probably more satisfying because you are making it without any help. But that's it.

A colleague from sales told me an anecdote once, that she is not going to use the word 'Startup' again during sales pitches and general customer interaction. I worked in publishing at that time and customers in this sector tend to be more conservative and long term planning than in other sectors. Essentially they feared that the company might not exist anymore in 2 years to come, because of {acquisition, restructuring, bankruptcy} or some other reason.

Appearantly beeing a 'Startup' seems to be associated instability and unreliability in some circles -- wich again is part of these 'cultural issues' wich I was talking about in the previous post.

Re: Germans don’t do tech startups – more access to capital might change that

#83

Post by cabraca »

zenovision wrote: post #81

Germany has a lot of drawbacks to be the next silicon valley: * the most difficult tax system in the world. even freelancers have to use accountant services, because most people will not be able to pay taxes properly without it. * high taxes - 42% income tax + Solidaritätszuschlag 5.5% = 47.5%; for corporations it's ~30%. * A LOT of buerocracy. I can't even send an email to tax authorities in my area, because they on…

> low salaries for software engineers. The most of senior software developers will earn 50.000 - 60.000 EURO anually and after paying taxes it's only ~2.600 EURO per month (3.000 USD)

i have 5 years experience and already earn that much. our most senior staff gets their low 6 figures + bonus. what most dont see is, that additionally to those numbers, your employer pays their share of your healthcare and social security. thats probably another 15% or more. you get at least 20 vacation days. most of the time its around 30. they cant just fire you because you got sick. and in case you get fired, there is a social security net to catch you.

yeah, from an US view it might look like a bad place and i would appreciate lower taxes. on the other hand: my mom is fighting cancer sind 1999. in the US i would already be bankrupt or my mom would be dead. or both

Re: Germans don’t do tech startups – more access to capital might change that

#84

Post by expertentipp »

merb wrote: post #64
prablenha wrote: post #22

Earlier quoted context omitted.

I'm European and I have never heard of any of those.

you never heard of zalando?!

The shipment and courier services are not that reliable in many places, many Europeans still buy clothes on Chinese/Vietnamese/local markets. There are really few people who buy branded clothes > 100 EUR per item while most retailers aim almost exclusively at them. Weird strategy of reaching to or convincing clients from other EU countries just by hiring some teenage anorectic tattooed models and influencers. Yeah, I can totally imagine someone from outside of Berlin never hearing of Zalando.

Re: Germans don’t do tech startups – more access to capital might change that

#85

Post by hnkf »

_petronius wrote: post #5

We do have tech startups here in Germany, and quite a few of them. It's just that they tend to be funded differently, and with less of the wild valuation-speculation that goes on in the US. I'm not sure that's a bad thing. As a corollary, the article cites European data protection law (in the context of not being able to collect usage data to improve the product) as a barrier to building startups which ... is also ve…

The article is wrong on many levels, you’re right. As a Berlin-based developer I’m not sure where they’re getting their facts.

Blaming GDPR for everything is another stupid trend I detest. I’ve inplemented a lot of stuff related to it and it’s definitely not what it gets pictured as.

At the end of the day it speaks more of the zeitgeist among Quartz’s “high-earning readers”.

Re: Germans don’t do tech startups – more access to capital might change that

#86

Post by southerndrift »

zenovision wrote: post #81

Germany has a lot of drawbacks to be the next silicon valley: * the most difficult tax system in the world. even freelancers have to use accountant services, because most people will not be able to pay taxes properly without it. * high taxes - 42% income tax + Solidaritätszuschlag 5.5% = 47.5%; for corporations it's ~30%. * A LOT of buerocracy. I can't even send an email to tax authorities in my area, because they on…

For startups, taxes for corporations don't matter. You only pay taxes on profits. If you are living off venture capital, then you have none. If you are self-funding with organic growth then you have to make sure that you spend all your profits on growth which you should do anyway. Once you have matured, you can still restructure the company like Apple or Google and turn into an Irish or Estonian company. That's the advantage of the EU.

High income taxes are a problem. But that's not a problem for founders since their profits are hidden in the increased value of the company. It's a topic for the employees. They have elected parties that redistribute income. It's their choice how they want to spend their income. If you compare wages between Germany and USA then those taxes haven't made German labor more expensive than US labor. People don't have to earn as much as possible right away because they don't face nothing should they ever become handicapped.

Re: Germans don’t do tech startups – more access to capital might change that

#87

Post by yayana »

Not mentioned in the article is that the EU is made up of many smaller markets that each demand a lot of customization. The Bay Area has instant access to 300 million consumers before anyone is dealing languages, currencies, etc.

B2C is more successful in the EU because barriers relating to foreign vendors are less significant to businesses as consumers.

Re: Germans don’t do tech startups – more access to capital might change that

#88

Post by yorwba »

mrhackerpoland wrote: post #61
tjungblut wrote: post #54

Earlier quoted context omitted.

> Which German company has a foreign born CEO? "William R. "Bill" McDermott is an American businessman and the CEO of the technology company SAP SE" [1] [1] https://en.wikipedia.org/wiki/Bill_McDermott

You answered that question. But Americans are being offered more compesation in American, why would they follow this CEO and move to Germany? You need examples from countries which are less prosperous than Germany. Where are Chinese, Indian, Ethopian CEOs of German companies?

https://www.softwareag.com/corporate/company/management/boar...

"Sanjay Brahmawar is Chief Executive Officer of Software AG, ..."

"He is a citizen of the world, born in India, and having worked and lived in England, Finland, Belgium, Holland, and Germany. An avid cyclist and runner, Brahmawar currently resides in Darmstadt, Germany."

Indian enough?

Re: Germans don’t do tech startups – more access to capital might change that

#89

Post by jlangenauer »

zenovision wrote: post #81

Germany has a lot of drawbacks to be the next silicon valley: * the most difficult tax system in the world. even freelancers have to use accountant services, because most people will not be able to pay taxes properly without it. * high taxes - 42% income tax + Solidaritätszuschlag 5.5% = 47.5%; for corporations it's ~30%. * A LOT of buerocracy. I can't even send an email to tax authorities in my area, because they on…

> low salaries for software engineers. The most of senior software developers will earn 50.000 - 60.000 EURO anually and after paying taxes it's only ~2.600 EURO per month (3.000 USD)

Nonsense. Here in Berlin, €60k would only be competitive for an engineer with maybe 2-3 years experience.

Good senior people can (and should) get €85k - €90k. If you're in Berlin, and want to be pointed in the direction of companies who pay that, hit me up.

VPEng / CTO / Director-level roles are now €100K minimum in Berlin, and often significantly above.

Re: Germans don’t do tech startups – more access to capital might change that

#90

Post by jlangenauer »

mrhackerpoland wrote: post #55

Startups need immigrants. Germany only accept immigrants from EU, not from China or India which produce cheapest empoyees offering max value. One key difference is that Startups lack fund. So either: 1. Funding be made more generous by offering tax advantages to invesitors 2. Or, biggest expense are employees, so we need employees accepting a dream stock unit and very low wage, so we can hire more of them. But I've t…

This is not true.

I'm Australian, and it was easy to get my Blue Card, and more recently my permanent residency in Germany. Compared to the nightmare of dealing with the UK Home Office, moving to Germany was a breeze.

(For those who don't know: if you have a 4-year degree, and can get a job-offer that pays €48K or above, you can easily get a Blue Card, which lets you work in Germany. Keep that job, and after 21 months, you can get a Niederlassungserlaubnis (permanent residency) with B2-level German, or after 33-months with rudimentary German. It's an amazing deal.)

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