Germany quietly setting startup records while everyone keeps insisting Europe can’t innovate is pretty funny. The real test comes next though: founding 3,000 companies is great, but if the successful ones still need to move to the US to raise serious growth capital, Germany has only solved half the problem.
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The main issue that Europe tends to have isn’t purely creating new companies, it is scaling them. Because the “single market” is still waaaay too different between countries, because the capital markets are too fractured, and banks have a low risk tolerance, companies can’t scale up nearly as quickly , which is why for example, Spotify is listed in US indices
Absolutely. Europe doesn’t lack ideas or founders: it lacks one deep, liquid capital market. A real Capital Markets Union could let European savings fund European scaleups instead of watching them head to New York for serious growth capital.
It's honestly more common cultural differences makes companies incapable of scaling outside of the cultures they were created in
Walmart doesn't exist in Europe. How come?
But if any company manages to scale across all of Europe, they're commonly able to expand to any location on the globe. The same can't be said for single national American mega corps.
Walmart doesn’t exist in Europe. How come?
Walmart has a huge variety of products, which are low value dense and need to be restocked a lot. At the same time people are generally price sensitive. Delivering a full truck of a single brand of say frozen pizza to a store is probably overkill. As in it requires a lot of storage space in the store until it is sold. That increases cost. So you need to take in the truck into a distribution centre and then send trucks with all kinds of frozen products to multiple stores. That creates a pretty strong moat. Combine that with culture and branding and it becomes really hard to enter a market.
If you have fewer products to sell, that becomes a lot easier. McDonalds has been able to set up restaurants all over the world. Thanks to having a pretty limited number of products to sell. That is also how German supermarket brands like ALDI and LIDL have been able to conquer most of Europe.
Actually, Walmart doesn't exist in Germany anymore. They tried, but US work conditions clashed with unions, and stuff like Walmart greeters was really creepy to germans, which is why they didn't like to shop there. So, at least for Germany, the main reason Walmart doesn't exist here is cultural
Walmart bought British Asda a few years later. They sold it since, but it worked out decently well for them. They also own stores in a lot of other countries outside of Europe, which certainly have a different culture.
I'm not sure we need megacompanies to corrupt our politics... midsized, sure, but I'm wary of whatever company has the size of Saudi Aramco.
Yes, and then the nice midsized companies will be bought out by bigger American ones.
Don't allow that. Let them compete.
Then we force big companies that operate here to be broken up and act as independent, midsized companies.
A small company is personal and ideal, but can be prone to collapse.
A large company is an indifferent corrupt moloch, with the power to manipulate politics.
A midsized company can be more resistant to collapse, without 'having to' be bailed out by governments due to entrenched corruption.
The "no real single market" tends to not apply to software companies, which can spread to other countries in europe relatively easily. There are also some reasons why people think its unlikely to be a lack of capital. For example if there were less venture capital in europe, then that capital would go to only the most promising startups (VCs can pick and choose who they fund). So you would expect the return on investment to be higher than in the US. But that's not the case.
Other reasons that impact scaling of startups are lack of know-how since highly skilled people tend to move to where the biggest companies are, e.g. silicon valley. And, and this one is always hard to hear, labor protections. It is a lot more risky to scale up when the people you hire are hard to let go if you encounter hurdles while scaling up. The eu countries with comparably many unicorns, are ones that have very flexible hiring and firing.
The no single market still applies to software, namely due to A- higher compliance requirements in Europe, B- waaaay bigger localisation efforts
Half of these startups are AI experts selling their own snake oil. I would wait after the bubble explode before getting excited
Artificial intelligence is the key driver of the boom: 1,038 of the newly founded startups have a clear AI focus—more than one in three—and thus more than in all of 2025. The software sector remains by far the strongest industry, with 844 new startups. But the boom is also evident in other fields: Medicine (274) and the food sector (181) are among the sectors with the highest number of new startups—AI applications and related technological advances are also key drivers of development here.
I wonder if the "fake it (with AI) until you make it" will have similar or worse success rate than before AI. Startups sure didn't wait for AI to produce bullshit.
I have mainly been seeing AI and defense companies in the German tech market. Not the kind of companies we need.
Which would you need?
An AI that can respond and receive fax messages...
Companies focused on digital sovereignty. The EU, both companies and end users, are completely dependent on US software and operating systems. There is a bit of movement around governments using Linux, but there is nothing happening around replacing iOS and Android.
You already have iode, /e/, Graphene OS and Jolla. How many other startups do you need? The problem is not lack of software. What is needed is legislation to force compatibility with de-googled phones. It's up to EU, not startups.
Also, EU needs sovereignty in defense badly. It's hard to fight American corporations when you still need US to defend you. Defense startups are welcome.
Exactly!! It's a government policy and regulatory problem, not a market problem.
We should avoid a military-industrial complex, though. So the defense must be nationally owned.
GrapheneOS is leading Android custom rom, but it isn’t a startup and doesn’t support much hardware.
The others are LineageOS based and have weak points when it comes to security, privacy, and frequency updates.
All Android custom roms are still directly tied to Google’s software development (AOSP).
Sailfish OS (Jolla) is Linux based, but is proprietary, so not really an open platform.
So seems like Jolla is the only company really developing an independent mobile OS.
So? You think someone is going to fund a startup and develop a fully independent, fully open source phone OS that will support modern hardware and all the apps stock Android does? Of course not. Jolla, Graphene OS and LineageOS show what a small company can currently do. You also have Ubuntu and Postmarket OS, Fairphone, Murena and couple more. Between them they cover all the niche markets: security, privacy, open-source, Android alternative and independent hardware. No one is investing heavily in them because those markets are really small. New startup trying to develop something from scratch makes no sense.
If I wanted to build any sort of US software competitior, I would go out and claim it is insanely AI to get funding.
Like memlog? https://www.sprind.org/en/actions/projects/memlog
It competed in a challenge to replace the whole von Neumann architecture.
Enabling a leisure society.
One that builds affordable housing?
That's a political problem. Most voters don't want housing to be affordable. Urban development is in the hands of councils mostly.
Nevertheless, wouldn't they be needed?
But why do you think German voters doesn't want affordable housing?
Measuring the number of new startup's as a success factor is IMHO very stupid. I once started a startup. Starting a startup is not that difficult. Keep that startup running past the five year mark, then you may start to talk about success...
Yes, but for germany this might be a metric for reduced bureucracy. Failing a startup is always easy, but starting a startup in germany might not be trivial.
Otherwise I agree.
It is very easy. Can be done within a week for a capital based company and even faster with a personal liability company.
Source: Am a Founder.
The amount of nihilistic, anti-German views (which are even mostly unrelated to the topic) is very telling imo. And more so as the views come in parts from accounts that post almost exclusively comments seeking to criticize Europe while hailing China and Russia if I may say so.
It would be nice to see more worker owned startups. I guess that's too much to ask though.
How many of those startup's are one person delivery contract firms, exclusively working for Amazon?
Verena Pausder comments: “To create global champions ‘Made in Europe,’ we need a strong European capital market.
She should start a startup to fund startups.
Though the easiest way would be to overvalue a company, e.g. an electric car company, which allows its investors to borrow against the shares and invest that money in new startups.
Unfortunately, Europe doesn't make it easy to borrow against shares yet. /s
Or one expands typical funding channels. Why do you think that investment is a bad thing?
I don't think that. This was an attempt at questioning the value of Tesla with a dash of conspiracy theory.
Europe has to expand the channels but the safer laws make it more difficult, which is the right thing. Otherwise we can expect that our banks have to be rescued soon.
Many laws in Europe are not about risk aversion, even though they are perceived like that (and there's a media obsession with this trope).
Forbidding pension funds from using certain investment types does not reduce long term risk, it only reduces short term risk.
The real problem in Europe is that it ingested neoliberalism much more deeply than one might think. One consequence is that Europe has an ideologically motivated short term investment horizon.
Another consequence of this ideological stringency in Europe is that Europe has subsidies (by GDP) that are about half as big as US subsidies and a fourth of China's.
Many european countries have a more than twice as large share of outsourced state tasks as the US.
Etc. Etc.
Yeah but most of these startups were founded because people fear for their job and want a redundancy...
Or have been made redundant and now use their severance.
Isn't that kinda what you'd want to see though? I.e. if older less competitive businesses are not able to operate or compete, we don't want them to just hold onto talented people, and we don't want those talented people to be jobless. It's good if those people go and start new, dynamic, competitive companies.
Obviously there's a balance to be found, and we don't want companies to be allowed to just dump employees for no reason every time they hit a hiccup, but Germany has very generous worker protections, and a strong social safety net. It's good to see these people starting new companies.