The Lazy Capitalist

Channeling Silicon Valley, German Start-Ups Look to U.S. for Inspiration

wywy
Employees of the Munich-based start-up company wywy .

Andreas Schroeter has his first trial by fire behind him. The founder of wywy, a Munich-based start-up company that helps advertisers bridge TV and online markets, came to New York recently for a mentoring program to learn from the U.S. market. And his mentors did not go easy on him.

“One gave me such a grilling, I simply didn’t know what to say anymore,” said Mr. Schroeter, who is hoping to improve the company’s “Second Screen” service for TV and online ads.

But he’s not shying away from the experience.

Although the German start-up scene is growing, it is far from American professionalism. Now an initiative by the German economy ministry and by companies like Deloitte, Volkswagen and Allianz regularly brings German start-up founders to New York, San Francisco or Silicon Valley – for inspiration, networking and to toughen them up. The program is called “German Accelerator” and has been bringing start-ups to the United States for three years.

“The Germans must urgently understand how to sell their companies correctly.”

Angel Investor, New York

Similar programs have long been a part of the international start-up world, including countries like Israel and Canada. In the end, many dream of repeating the success stories of Google and Facebook in their own countries.

“We Germans took a while to see the value of the start-up companies,” said Dirk Kanngiesser, who leads the “accelerator” project in Silicon Valley.

There is much to learn.

“The Germans must urgently understand how to sell their companies correctly,” said a New York “angel investor”, who declined to be named. Angel investors support young companies in their early phases before venture capitalists swoop in. Many allow start-ups to compete in 15-minute cycles for their money.  Whoever is not immediately convincing gets the sack.

The Germans are disadvantaged in many ways: To sell an idea grandiosely and confidently is not comfortable for many German start-up founders.

“Many are too obsessed with details, instead of presenting the big picture,” said one investor.

Andreas Schroeter and Tobias Schmidt, founders of wywy. Source: Gründerszene.
Andreas Schroeter and Tobias Schmidt, founders of wywy. Source: Gründerszene.
Andreas Schroeter and Tobias Schmidt, founders of wywy. Source: Gründerszene.

 

Also, German start-up founders sometimes forget that Americans don’t know anything about their German clients, unless it a global giant like BMW or Siemens. And having state subsidies, which counts as a distinction in Germany, more likely discourages U.S. investors.  Most young German start-up founders also don’t have degrees from elite American universities such as Stanford or Harvard.

But there are opportunities. The market is big, investors want to invest and Germans often have polished products, said Mr. Kanngiesser.

If everything goes well, wywy could open a branch in New York. The big advertisement agencies are there, many trends are promoted on Madison Avenue and the six-hour time difference with Germany is not as great as with California’s Silicon Valley.

The important thing, say founders of German tech start-ups, is to keep learning. The next trial by fire is already waiting.

Astrid Doerner is a U.S.-based correspondent for Handelsblatt. She can be reached at adoerner@handelsblatt.com.

 

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