Technology seeks founder

How do you foster business start-ups?

According to the latest statistics and data coming out of Germany, the transfer of technology into industry seems to be working well. With 16,900 registered patents in 2006, Germany ranks number 3 worldwide, behind the United States (49,600) and Japan (26,900). Per person, Germany is actually number 1. Thanks to the continuing number of innovations, in recent years Germany has developed into the global champion of exports. Even before this, the nation looked back on a rich history of innovation, filled with success stories – some resulting in multi-billion dollar markets: the television, fax machines, hybrid engines, even MP3 data compression. All of these inventions have one thing in common: they were mainly – or entirely – put to economic use outside Germany.

Germany certainly does not seem to be short of leading scientists. In the past 50 years alone, it boasts 20 Nobel prizes for chemistry and physics. Nor is it lacking in product ideas and patents. But entrepreneurs seem to be in short supply. Entrepreneurs who are brave enough to set up a company and convert concepts into products – despite the mistrust of their peers.

According to the 2006 Global Entrepreneurship Monitor, only 3 per cent of Germans between the age of 18 and 64 start up a company. Only 6 or 7 per cent of these are in the field of hi-tech (source: Spiegel magazine 42/2007). This puts Germany in 32nd place out of the 42 countries covered by the study. On top of this, around 30 per cent of all entrepreneurs were primarily motivated to become self-employed by the fear of unemployment. So it comes as no surprise to see the number of new technology companies going down – not up – when the economy is doing well. In the field of electronics alone, the number of start-ups has halved in the last decade.

University graduates are once again in a position to choose where they work; and more and more of them are opting for a career in industry. But do they know about the option of self employment and do they actually see it as a genuine alternative career path? In the meantime we are witnessing a knee-jerk reaction to this issue from politicians and educational establishments – with calls for business training running in parallel to studies in the field of natural science and engineering. But the key issue here is not a lack of business understanding. It is not this that is stopping young people choosing self-employment. The main problem is that they simply do not realize that there are sponsoring establishments, networks and investors there to support them. There is not enough inter-disciplinary exchange of information between business faculties and the natural sciences.

The Federal Government and Federal States have now created an infrastructure to facilitate technology start-ups: Exist-Seed, High- Tech Gründerfonds Management GmbH (272 million euros), business plan competitions and a variety of local networking initiatives. Ostensibly highly impressive, but given the decreasing number of start-ups it does not seem to have changed anything yet. It is an unfortunate situation, but it can be solved quickly without red tape.

To avoid bureaucracy, the first thing to steer clear of is merging business basics and natural science or engineering degrees. Students hardly have the time to do a second degree or go to more lectures to become familiar with the legal or commercial basics. Not unless they neglect their actual studies. What can work is postgraduate seminars with a business planning game. Coordinated with professors from the field, this option is simple and relatively cheap: when they are writing their diploma or thesis, young scientists and engineers are already thinking about their working career.

The key priority has to be to offer graduates additional avenues that work with their scientific knowledge and forge their future career. We need to embed them within the commercial context of business and provide them with the instruments to experiment and weigh up the opportunities and risks presented by technology start-ups. Ultimately, for this approach to work, it will be key for companies and universities to stop seeing spin-offs as competition for the best people. The opposite is true: they are a key engine of innovation for the good of all interest groups in society.


Dr. Stephan Haubold
Steinbeis Consulting Center Technology Exploitation and Strategy (TES) (Bonn)

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