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Startup Ecosystem Stuttgart Region - Potential to become a startup hotspot?

April 1, 2021

An article from Startup Stuttgart, written by S. Roeder
[Picture: https://startup-stuttgart.de/]]

How to do it - a virtual discussion group 

"I like Stuttgart, have settled in by now. But there's still a lot to do," says Sascha Karimpour of Plug and Play Stuttgart with a benevolent wink. His conviction would have made a perfect motto for brainstorming among committed experts. Recently, Alexander Brem from the University of Stuttgart and professor for entrepreneurship in technology and digitalization, Alexander Diehl from the AI network Cyber Valley and responsible for the topic of startups, Philipp Gneiting, responsible for the Startup Autobahn and Open Innovation at Daimler, and Sascha Karimpour, managing director for the Silicon Valley company Plug and Play Tech Center in Germany and for the Startup Autobahn platform, debated about the local startup landscape in a virtual round. The discussion was initiated and moderated by Christoph Röscher, Chairman of the Board of Startup Stuttgart e.V..

At Startup Stuttgart, Christoph Röscher is working with the City of Stuttgart's Economic Development Department to draft a "white paper." In it, a whole range of stakeholders are to comment on what they see as the current situation in the greater Stuttgart area, in order to deduce what needs to happen in this country so that the startup ecosystem can develop even further. The goal for all participants of the discussion round is clear: One wants to become even more successful with startups in the region, the potential is there! 

In the separately conducted virtual discussion round, the common view is that there are still many synergies to be leveraged, the entire ecosystem needs to be better and more effectively networked, the measures that are successful today need to be more closely interlinked, and the state capital also needs to work more closely with the surrounding municipalities to gain more international visibility and clout. A parochial policy will not be enough to develop the best founders and startups in the region, or to compete with the best ecosystems in Germany and attract founders from other regions.

Expand powerful network, strengthen synergies

The wishes and ideas, at least in this exchange between university, industry, Cyber Valley and Startup Stuttgart, were all clearly outlined: Daimler innovation man Gneiting would like to see a functioning network between large companies like his employer and startups, as well as a lively exchange with universities and other open innovation stakeholders. Diehl is motivated to bring his experiences from his time in Silicon Valley to Germany and Europe, praising Baden-Württemberg as "very innovative."

Unlike Karimpour, who was sent to Stuttgart to build the Startup Autobahn with Daimler, Alexander Brem made his choice for the city "very consciously." "I was attracted by this environment - what's already here and, above all, the prospect of what else can be built here together." 

Karimpour: "Stuttgart really already offers a lot. There are a lot of players in the ecosystem who are involved in entrepreneurship and also help make it more attractive to startups." For the Startup Autobahn alone, he lists what impressive "on-board resources" already exist: Currently, there are several accelerators, more than ten government and private support networks, co-working spaces, three to four outstanding startup events including the Startup Weekend of the Hochschule der Medien, founder barbecues of Startup Stuttgart and much more, which the Startup Autobahn and Plug and Play actively support and where they participate. In addition, there is a fairly broad network of investors, from angels to those who later become involved in startups, such as Grazia and BARS from Stuttgart.

Going the Swabian way

Although a lot has happened in the last ten years, there are still many problems and obstacles, so that Stuttgart still does not stand out as a startup hotspot. Röscher wants to know why. The unanimous opinion is that it is a mistake to look only to other German cities such as Berlin, Hamburg or Munich. Karimpour: "We should go the Swabian way, not copy other cities - we have great opportunities here." The strong industry, the region's formative SMEs, the world market leaders and hidden champions are a basis that other regions would envy us for. Brem agrees, emphasizing as an incomer the strong individual character of a state capital. "We have to build on the strengths of Stuttgart and the strong surrounding area, many very good resources are already there and just need to be brought together better. We have to look at what fits well with the local Swabian mentality, and that means you don't always gossip about everything, you just do it," said the native of Lower Bavaria. Even the most successful companies in the region started out small. The "founder gene" is also present here, but is often hidden behind Swabian modesty.

In concrete terms, he says, it is a matter of getting small and medium-sized businesses and industry, which are plentiful in Swabia, but which are not so much on the radar when it comes to startups, on board. He and his comrades-in-arms advocated seeing Stuttgart as an opportunity whose region offers a "completely different spectrum". The right players are needed, resources must be coordinated - but no university, no college, no company, no ministry can do it alone. The state capital and the surrounding municipalities also have an important role to play. They must see the startup eco-center, on which the prosperity and vibrant life of the region depend, as a top priority. If you look back at the Stuttgart mayoral election campaign - where was the focus on innovation, transforming the economy, creating ideal conditions for startups? 

Diehl observes a natural fluidity within the startup world: "There are startups that go from Zurich to Berlin and Berlin startups that move to Silicon Valley. In other words, the caravan definitely moves on after a certain amount of time. Nevertheless, you see that locations manage to catch up, such as Zurich within a few years. That should be our goal as well." The good thing about Europe compared to Silicon Valley is this network of innovation centers, not just the one epicenter. Stuttgart, he said, has a real opportunity to anchor itself as a hotspot within this network with targeted measures. 

Cambrian explosion of creativity

Whether the Stuttgart region in particular could make up the 20-year shortfall in three years was up for debate. Precisely because so many global champions and high-tech companies are located in the region, and thus also a great deal of money, Diehl is optimistic that, in contrast to other regions, the Stuttgart region can certainly succeed in catching up fairly quickly and becoming a hotspot. However, the prerequisite for this is to consciously give up some of the "Swabian-ness," i.e., a ponderous demeanor and working in secret. "If that succeeds, we can quite quickly spark a kind of Cambrian explosion of creativity and startups everywhere." So that success stories like CureVac become the rule, not the exception. Diehl is not alone in his view that the moment two or three great startups emerge in Stuttgart that really have traction, things "take off faster" as a result.

Gneiting underscores this view, adding, "In order to become a hotspot, we as Stuttgart have to manage to give ourselves a distinctive profile. This must pay tribute to the fact that we are a strong B2B state. We have so many hidden champions, so many global players - we have to use that to our advantage." Added to that, he said, is the further challenge, the ultimately positive situation, that Stuttgart has not just one strong area, but many. This network of additional centers such as Tübingen, Karlsruhe, Mannheim must become a strength of Baden-Württemberg in terms of perception, he said. "Then we have the chance to be highly attractive in certain topics." For startups and investors, of course. 

The pull of established, successful companies runs counter to the start-up spirit

Is the region too saturated, too successful thanks to companies like Daimler, Porsche, Bosch and many others, so that many people don't even think about starting a business? Brem subscribes to this view: "If students already have so many job offers during their studies that are so attractive - i.e., not only innovatively, but also financially - then that is naturally tempting, and these students consequently drop out as founders." And even if the most successful founders are not necessarily those who start up fresh out of university, but those with four to five years of professional experience, they then went from one successful company to another, so not to spin out and also not to join forces with startups.

However, the startup culture is already being instilled in the minds of the students. Through early-stage events, lectures and low-threshold taster opportunities. "That's where everything has to flow together, and it takes a round of willers like ours to expand. Very importantly, it needs successful role models from the region to show that there can be a founder gene in everyone and that founding doesn't have to be a second-class option to a job in industry. CureVac, Fahrrad.de, Teamviewer are very successful "grown-up" startups from the greater Stuttgart area. There is a lack of attention for such success stories to inspire other people interested in startups to become entrepreneurs. 

Taking startup founders by the hand is a long journey, he said, and doesn't happen overnight. "There have to be people who just do it and pass balls to each other," says Brem, looking at the round on his monitor and summing up, "We have the same enthusiasm for promoting and challenging startups in addition to our jobs. Together, that multiplies in the most positive sense."

As a result, Gneiting, who with his team is always on the lookout for "the next big thing," would like to see more "WOW Startups" à la What3Words and, last year, UBQ. The latter is an Israeli startup that uses household waste to produce upcycled plastic that will be used to produce components for vehicles in the future. "In this way, we at Daimler are supporting our sustainability ambitions. At the same time, we've found a really cool new partner in the startup, which we're gradually building up into a really potent supplier that does more for us." Daimler probably wouldn't have been able to do this on its own. "Because for our zillions of technologies, we don't have a hundred people on each topic, but just one or two." And Karimpour adds from a plug and play perspective, "Sure, we would love to have quite a few applications and opportunities to source more top-notch regional startups. Then we wouldn't need to scout all over the world, and our partners could work with local startups with a similar mindset."

Round of the willings - "then it works."

Precisely because everything is actually available in the region, he said, there needs to be a clear "navigation system" that educates about opportunities, tells you where to go and when, but also conveys the spirit entrepreneurship - along the lines of "If you want to be an entrepreneur, you have to take action. Others can't do that for the person in question, which makes "Leading by Example" all the more important as a motivational boost for potential founders. Brem comments: "I think it's now quite cool to have a startup. I think that has changed over the last few years." 

Gneiting calls for more overall visibility and focus in Stuttgart on the topic of startups, ideally via a huge startup festival on Schlossplatz. Not as a once-only event, but as a regular get-together. Nevertheless, the "Round of the Willings" sees the region as having huge potential. The priority is to bring together the individual threads of success and to carry the good message to the outside world - with justification and a little more self-confidence than before. One participant joked that Stuttgart had managed to make it into the press as the capital of emissions of particulate matter, so there should also be an opportunity to be perceived more strongly as a startup city.

Further sharpening positive developments

Christoph Röscher from Startup Stuttgart e.V. also sees himself confirmed at the end of the debate: "As a region, we have 100 years of experience in entrepreneurship and also the best conditions in other respects. We need to get people even more excited about the topic of startups and optimize the hard and soft framework conditions. There is no reason why the Stuttgart Region should not take a leading role in the startup ecosystem in Germany".

Sascha Karimpour concludes convincingly: "I've been all over the world. And, yes, I like Stuttgart, have since settled in - but there is still a lot to do." - Compared to other cities, "We're not a cosmopolitan city. That's okay, too. But you can still make the city a bit more attractive and welcome newcomers more. Startups often mean a lot of young people who also want a bit of scene life, and there's still something you can do here," he notes with a wink.

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This image shows Melanie Minderjahn

Melanie Minderjahn

M. A.

Research Associate, PR Manager

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