Comparison of the startup culture in France and Germany

In the last ten years, start-ups have continued to boom on both sides of the Rhine. The innovative and agile business model is still going strong though still just as likely and quick to skyrocket as to plummet. Germany and France, both in their own way, are each trying their best to attract young entrepreneurs. Although France has declared itself the "start-up nation", the overwhelming majority of infrastructure and companies are based in Paris. Germany therefore scores with a denser overall ecosystem. Who will come out on top in 2023?

At the end of March 2016, the city of Paris symbolically handed the keys to the city over to young, international entrepreneurs. Since then, the number of start-ups in the Île-de-France is said to have risen to over 12,000, according to Startup Genome. This puts the city in 18th place in the world rankings, 15th in the field of "green" technology and 10th in financial technology. This places the French capital at the very top of the European Union. Indeed, since Brexit, Paris has overtaken the previous leader, London.

This success is the result of an ambitious investment campaign that has lead to an exceptional infrastructure for start-ups. At the top of the system: Station F, the largest start-up campus in the world, with 1000 companies on 34,000 square meters.
The year 2021 was indeed characterized by records for French Tech, with a total of 11.6 billion euros raised for start-ups. In Germany, the opposite happened: Growth in the sector had slowed during covid, and returned to full capacity in 2023.

With 81 % of French investments, Paris is the undisputed central hub for start-ups. The concentration of new digital companies is much higher there than in any other city in the French Hexagon. That's how the bleu-blanc-rouge corporate landscape differs significantly from the German one.

With 112 billion euros in investments and sales ("exits"), Berlin is "only" just under 40 billion below the French capital and remains the most important player in the country. However, in contrast to France, there are locations in Germany that can compete with the capital in terms of attractiveness and activity.

Munich (54 billion euros), Hamburg (12.3 billion euros), Stuttgart and the Ruhr region thus account for more than a third of all garman start-ups.

In France, Lille and Lyon occupy second and third place in the ranking with 8.2 and 6.8 billion euros respectively, while Paris retains 145 billion euros for itself. Overall, the German regions are much closer to each other in terms of the number of startup headquarters.

The amount of options and opportunities in different German regions plays into the hands of foreign investors. They can ask themselves : where are my clients? Where do I have the lowest investment, the quickest return? As a result, even French entrepreneurs do not hesitate to cross the Rhine to get their projects off the ground.

Boris Brüllmann, founder of the start-up Wefactory, explains:

"In France, entrepreneurs can be held back from the outset by the steep rents, the price of materials or the cost of living."

Many French entrepreneurs who now live in Germany agree: the cost of starting a business is much lower in Germany.

In the first half of 2023, the number of start-ups founded in Germany rose significantly, by 16 % compared to the previous year. This is according to a study by the German Start-up Association (* Bundesverband Deutsche Startups), which lists more than 1,300 start-ups created that year. This is supported by the significant aid introduced by the government since 2021, slowly showing results: the "future funds" (Zukunftsfonds) provide several billion euros in aid for each of the five predefined types of start-ups. According to entrepreneurs such as Jérôme Feys, co-founder of the start-up *Vescape in Berlin, the German government's start-up strategy is already creating a positive impact:

"There are many grants and innovation programs in these cities that allow you to grow. But above all, there is a real entrepreneurial culture in Germany. Numerous events are organized for companies where you can quickly build up a large network."

These events include, in particular, the Start-up Summits, which are organized by the federal states following an initiative by the federal government.

Few French entrepreneurs who have set up in Germany want to return to their country for business reasons. On the other hand, some Germans have made the reverse journey to France, as in a sort of "start-up swap", for structural opportunities or because of the country's openings both to the East and West.

The decision to set up in one country or another has to be based on several factors:

• Cost of setting up vs. attractiveness of the city, cities or the region
• Legal and financial advantages depending on the industry and type of company
• Specialized competitive landscape
• Cost and difficulty of talent acquisition

According to a study by PwC, start-ups employed an average of 19 people in 2022 and were looking for 8 additional talents. German legislation also offers advantages for start-ups in this regard, with a facilitated and attractive system that encourages employee equity plans.

To meet your hiring needs in Germany and France and quickly obtain profiles with the right mindset and flexibility, there are also specialized platforms.

Nikolai Rabald