German bureaucracy and complex legal structures are one of the most significant barriers early-stage start-ups deal with while establishing themselves in the country. The complications increase for foreign founders aiming to set up their companies in Germany.
Earlybird, a venture capital investor focusing on European innovation, has managed to guide such migrant founders with a six-month program. By establishing a pro bono Incubator and Impact Fund called “Vision Lab”, Earlybird has assisted the founders with workshops, networking events, mentoring, and funding to turn their idea into a viable product. What started as a mentorship program two years ago has now turned into a full-blown start-up incubator, supporting founders from Europe and other continents like Asia, Africa, and Australia. “It started as an idea to understand migration as an opportunity,” said Dr. Hendrik Brandis, co-founder of Vision Lab. “By fostering tech start-ups in the early stages and supporting people with a migrant background, we aim to have a positive impact on society,” he added.
The program organized its third demo day in Berlin, offering a platform for ten start-ups to pitch their prototypes and business plans to potential angel investors and venture capitalists.
In the six months leading up to the demo day, the founders received support not only from Earlybird mentors but also from well-established partners like Bain and Company and Handelsblatt. The partners not only provide financial support to the start-ups but also help them grow from a strategic aspect.
Hurdles for migrant founders
While the demo day laid down the perfect platform for these start-ups to showcase their innovation and future goals, it also allowed them to speak about their hurdles. It has been a challenging journey for Omkar Pimple, the founder of Myracle.io, who comes from India. “Right from incorporation to operations, bureaucracy is a challenge. You need to book appointments with the notary (and pay them) for even small things like company address changes,” he said. Though there are public grants to support start-ups financially, the application process is intimidating. Moreover, due to the language barrier, it is necessary to have a German co-founder dealing with complex red tape. As a migrant, it is great to be an employee in Germany, but establishing a start-up is not the best idea, Pimple felt.
Pimple’s brainchild Myracle.io offers teenage students an AR-based education application that boosts interaction and hands-on learning.
Blipstream employee Imants Igoven shared a similar experience. He was equally discontent with the time-consuming approach of the German administrative structure. “We had to wait three long months for approval before we could implement our computer-vision solutions in retail stores,” he said.
Complex German bureaucracy compared to the neighboring countries
“The procedure was comparatively simpler when I was running a business based in Estonia,” said Pimple. He feels that in countries like Estonia and The Netherlands, the start-up ecosystem scales faster in absence of unnecessary legal protocols. While in Germany, it is “nearly impossible” to establish your start-up without being physically present and dealing with numerous paperwork.
“ You will also pay a lot in taxes, even as a young company,” Pimple complained. Comparatively, the Netherlands offers new companies with tax relief as a part of their entrepreneur allowance.
Vision Lab provides support
“Bureaucracy, slowness, and illogical complexities are hindering the progress of young people with great ideas,” regretted Benjamin Wilkening, Vision Lab partner. But the program has witnessed a steady success rate among the selected start-ups. “We are only in our third cohort, and we already have start-ups who have scaled past the growth stage,” he added.
Vision Lab connects these migrant founders with service providers and experts familiar with the legal procedures of start-up foundations. Moreover, the incubator also connects the start-ups with already established companies that not only share their experiences but also act as a steady source of support.
“It started as a charity but has slowly evolved into a full-blown incubator lab,” said Wilkening. He believes that founding a startup invites a lot of pressure and complications for entrepreneurs. By establishing an incubator such as Vision Lab, he aims to ease the burden from the founders’ shoulders.
With more and more international founders establishing their start-ups in Germany, Earlybird’s Vision Lab might be a great launching pad for early-stage innovative companies. Meanwhile, the echoing frustration among visionary founders regarding the complex German bureaucracy calls for a necessary change in the system.
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