Frankfurt needs more startups. And not just that. The region itself – in a cooperative endeavor with universities, large companies and stakeholders of the entrepreneurial ecosystem- is aiming to achieve their full economic potential in terms of startups creation. For many years Frankfurt has played a relevant role as global financial center and now the focus should be placed on nurturing the startup ecosystem of the Rhein Main region, but how to achieve that? Startup Genome, in partnership with Goethe Universität, Yi Shi Foundation and TechQuartier have reached in the “Frankfurt Startup Ecosystem Report” the following conclusions:
Startup output will be achieved through activating talent in universities & large companies, and by increasing early stage funding sources
To foster the creation of tomorrows ideas, businesses and innovation, and to reach the level of international entrepreneurial hubs such as Helsinki (500-700), Barcelona (900-1100) or Melbourne (900-1300), the Rhein-Main region must triple the number of startups in the regional ecosystem. To achieve this KPI, the pool of talent in the region (which hovers above 200,000 students, a lot of them international) must be activated through entrepreneurship programs. This means not just focusing on producing entrepreneurs but also preparing them to work in startups. Students should broaden their horizons to see startups as a viable career option, something which can not be so obvious in a city with a large number of corporates offering both brand recognition for the CV along with well-paid internship positions.
An example of presented by the report is Waterloo´s Co-Op program in Canada, which allows students to work in tech companies and startups for up to two years. Such entrepreneurial initiatives should be replicated in the educational network of the region not just to build business acumen across the student body, but also to nurture and activate the pool of talents for local companies and startups. As stakeholders of the ecosystem, large corporations need to see their involvement in the startup community not just as a way of building a potential acquisition pipeline or to outsourcing innovation. The creation of alliances between startups and corporations to commercialize new products and services and scale ideas is a key action for an ecosystem that is expanding, and ultimately opening their research portfolios to support innovation is a good way to providing startups access to expertise and capital. To achieve the goal of expanding the ecosystem and go beyond the activation phase, the gap on seed funding should be diminished and the regional Business Angel community could be a relevant actor to provide additional seed capital. The Rhein-Main region itself must also be attractive enough to bring investment from abroad and achieve its full potential as entrepreneurial hub.
Increasing global connectedness and Market reach
Having considerable room for growth, local founders should focus their efforts on global market ambition, international exposure and think globally. To accomplish this, the report is pragmatic: Rhein-Main region founders should expose themselves to international ecosystems, global fairs and startup events emphasizing the objective of outspreading their market reach and business network. Moreover, Frankfurt’s goal of becoming an international entrepreneurial hub cannot be achieved without leveraging the entrepreneurial mindset and ambition of international students and immigrants. The Rhein-Main region founders´ and the ecosystem itself should close the gap between the total population of immigrants and those of them who have become founders.
The region is home to approximately 32.000 international students. By exposing them early to startup work experiences and integrating them into the ecosystem and the region itself, the goals of internationalization, expansion of the ecosystem and cooperation with international hubs can be achieved. Moreover, the recent influx of refugees must not be overlooked. With their experience, skills and drive, they can become an advantage to our ecosystem that would have been otherwise. Singa Business Lab in Berlin is a good example of that.
Frankfurt startups must build on the city’s established strengths – and corporates
Strategically positioned at the heart of Europe, Frankfurt’s role and reputation as global financial center is being tapped into by entrepreneurs, especially Fintech and InsurTech startups. To build on Frankfurt strength’s, corporate engagement with startups should be encouraged to create innovative solutions and scaleups (>$1M funding raised and at least one funding event). Initiatives such as Tech Nation in the UK (which brings together a panel of experts from the finance industry) and Lazaridis Scale -Up Program in Canada should be imitated in the region. Moreover, Business Angels should increase their participation volume providing access to seed financing for early stage startups to create scale ups in the future.
At this point, now that the local Fintech subsector has reached a mature phase, the focus should be on the regulatory challenges and the creation of more scaleups. With several multinational corporations present, Frankfurt now has the chance to create and sustain a community where quality startups can engage with corporate partners and the main goal of the Frankfurt Masterplan, which is to create 1000 startups by year 2022, can be achieved.
To find more information about the Frankfurt Startup Ecosystem Report, you can click here