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A Stimulus for German Companies

U.S. and Israeli Start-Ups

It only takes a brilliant idea and a computer

It only takes a brilliant idea and a computer

 

Everything starts with an idea – and sometimes this idea turns into a multibillion-dollar business. This might be the essence behind a business model called start-up, a term that has become popular with the increase of various dot-coms during the ongoing information technology bubble. Start-up companies take on various forms, but in contrast to an average idea, you can find specific characteristics that distinguish successful technology entrepreneurs from common concepts: prosperous start-ups have a high level of innovation plus the outstanding potential of growth. All of them have something in common: a brilliant idea – but a lack of sufficient financial resources.
Once founders recognized the necessity of financial sponsorship and a strong business concept in a start-up with enormous economical potential, the persons in charge have to decide whether they are willing to turn down a multibillion-dollar buyout or speculate on receiving even more later on.
According to the 2012 Ecosystem Report, the U.S. is home to the biggest, most significant and influential ecosystems. But close behind the front runner, Silicon Valley, is Israel, that is Tel Aviv, ranking 2nd: Silicon Wadi.

Israel: leading alternative in IT-Business

Whilst Silicon Valley generated more billion-dollar-companies than any other economic system, it is Israel’s specific role that makes Tel Aviv the leading alternative in IT-Business. Israel boasts neither traditional industries which could have been developed over the past 60 years nor natural resources. So, ingenuity is called for. By dint of founding and high start-up output, Israel became the “Start-up-Nation” with the highest density of tech start-ups in the world, which attracts per capita 30 times more direct investments than Europe. This subsequently led to the establishment of a development department by international business ventures like Microsoft, Intel and Cisco. Telecommunications giant, Deutsche Telekom, works closely with Ben Gurion University at Be’er Sheva in the field of network security.
63 Israeli business ventures are registered on the NASDAQ Stock Market, more than from Europe, Japan, Korea, India and China put together. Where does this success come from? Some people say Israelis learn creativity during their military service. Young Israeli servicemen are taught to criticize officers. Hierarchies are evened out, opportunities for networking emerge. On balance, the pure facts are important. Israel founded start-ups that were taken over by larger companies include: the traffic-app Waze by Google for 1.1 billion dollars – and at the same time the first Israeli one-billion-dollar Dot-com – as well as the mobile data compression Onavo by Facebook for 120 million dollars. These examples show the possibility and value for a country with just seven million inhabitants to initiate such ventures and stay prominent in the business.

Magnet Berlin

And Germany? The last German tech start-up to become a global star was SAP, founded in 1972. In the Ecosystem Report, Berlin is ranked at number 15. The city’s district Mitte, in particular the neighborhood around Schönhauser Allee and Torstrasse, is a magnet for worldwide entrepreneurs and investors. Berlin is considered a lifestyle metropolis, compared by some to the Big Apple years ago – now ranked at number 5. Every day a new start-up is founded in Berlin, often by non-Germans who come to Berlin to start businesses. Recently, there was more capital flowing into Berlin than into London. Start-up conferences are regular events in the city, and the government, large financial institutions like Deutsche Bank or the Federal Development Bank (KfW), as well as the Humboldt Innovation spin off shop and service center, are keen to encourage young entrepreneurs.
Yet is it German “aloofness”, as some might say, and the fear of failure which deter many Germans from founding a company? Others believe that Germany has no need to produce the next Google or Facebook because they rely on other options like their often family-owned Mittelstand businesses.
However, the recent FLY Berlin Conference proved that cooperation in the start-up scene within Europe and the collaboration with Israel might well result in a future counterbalance to the dominating position of the United States.

Photo Credit: Heisenberg Media

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