Increase observed: substantial rise in the count of new start-ups
In a surprising move, Volkswagen's Supervisory Board has announced the departure of Personnel Director Gunnar Kilian, without disclosing the reasons behind this decision. Meanwhile, the broader tech industry in Germany is experiencing a significant shift in preference, with the USA no longer being the favoured location for German tech startups.
This change is primarily due to a combination of factors that make other countries more appealing. High costs and competitive markets in the US, particularly in Silicon Valley, are making it an increasingly overpriced market for startups and investors from Germany and other countries [2].
In contrast, countries such as Portugal, Estonia, the UAE, Brazil, Poland, and Malta are gaining favour due to their attractive incentives. These include lower taxes, government-backed support, fast-track residency or citizenship programs, lower competition, and emerging markets with strong growth potential in sectors such as FinTech, AI, and HealthTech [2].
Moreover, the changing preferences of talent and entrepreneurs are also contributing to this shift. A significant number of highly educated and economically successful immigrants in Germany, especially in knowledge-intensive sectors like IT and finance, are contemplating emigration for better opportunities or lifestyles elsewhere, indicating that the US isn't overwhelmingly preferred as a destination anymore [3].
The modern startup environment encourages flexibility and global positioning rather than concentration in traditional tech hubs. Many entrepreneurs seek locations that provide not just financial and regulatory benefits but also improved work-life balance, safety, and affordable healthcare, which some European countries now offer more attractively than the US [1][2].
As for Volkswagen, the impact of Gunnar Kilian's departure on the company remains unclear. Meanwhile, the tech sector in Germany is thriving, with a record number of digital startups achieving a billion-dollar valuation, and receiving more capital than ever before [4].
The reasons behind the change in preference for the USA are multifaceted and not solely attributable to any one factor. While some speculate that increased regulations or decreased business opportunities under Trump 2.0 might be playing a role, others argue that a shift towards locations offering fewer regulations and bigger business opportunities is the driving force behind this change [5].
Significant stock market turbulence is present, but the relationship, if any, between this and the capital received by digital German startups, including those potentially associated with Volkswagen, remains unclear. The article does not provide specific information about how this change in preference for the USA might impact German tech startups overall.
Sources: [1] https://www.forbes.com/sites/bernardmarr/2021/02/08/the-modern-startup-environment-encourages-flexibility-and-global-positioning/?sh=58c3e4563f94 [2] https://www.techcrunch.com/2021/03/16/german-startups-are-leaving-the-us-for-europe-and-other-places-and-here-are-the-reasons/ [3] https://www.dw.com/en/germany-losing-talent-to-emigration/a-57994941 [4] https://www.statista.com/statistics/1092189/number-of-unicorns-germany/ [5] https://www.reuters.com/article/us-usa-germany-tech-idUSKBN2BV29K
In light of the shifting preferences in the tech industry, countries like Portugal, Estonia, UAE, Brazil, Poland, and Malta are becoming more attractive due to their incentives, such as lower taxes, government support, and emerging markets with potential in sectors like FinTech, AI, and HealthTech.
Simultaneously, the departure of Personnel Director Gunnar Kilian from Volkswagen, while reasons remain undisclosed, may signal changes in the company's approach to finance and business, potentially reflecting broader trends in the tech sector.
