Find a desire to change the world? Check. Put together a well balanced team? Check. Conduct your first phases of market research to validate the idea? Check. Develop your first prototype? Check. Figure out where to set up your newly founded startup’s HQ? Wait… what?
It’s pretty common around the world, actually; not too much thought is actually put into where to geographically found the company. To be clear, in 2018 a company can be started, get up and running, and even operate for quite some time without being founded. When I use the term founded, founding, found, or any variation thereof, I am specifically referring to establishing your company as a full legal entity. In the case of Germany, that is a full-fledged GmbH, in the United States that is an LLC, and so on and so forth.
For a lot of people, the where becomes a factor of pride. Don’t get me wrong, there is absolutely nothing wrong with pride. You’re from a certain city, or maybe even your entire team is from a certain city, so you want to get that city on the map, right? Be the next Google or Facebook that can proudly say their humble roots were founded in some small village on the Czech / German border – that’s the ambition, right?
That’s a beautiful thing, it really is; but in some cases, it can be a mistake. Perhaps Leipzig isn’t necessarily the answer for you specifically, but what I am getting at here, is do the research to see what is geographically feasible for you. There may be some benefits you’ve never heard of that can be extremely advantageous to a young company.
I may indeed be biased in this respect, because well, I am the marketing manager for a startup accelerator in Leipzig. That being said, I’ve got a lot of personal experience working in various startup hubs in the world, and Leipzig certainly has some advantages that I have not seen anywhere else. Let’s get on with it, then, shall we?
1. Lots of potential for free money for startups!
Wanna know what the two biggest problems for early phase startups consistently are?
- Not enough time.
- Not enough money.
I know, right – totally groundbreaking stuff here to think that a small team running a new startup could be lacking in those two elements? Can you guess which of those problems Leipzig can help alleviate? Here’s a hint: setting up an entity in Leipzig is not going to suddenly provide you with more time. 😉
YEAH, YOU GUESSED IT, FREE MONEY!
Leipzig and the Federal State of Saxony have quite a bit of opportunities for startups and new companies looking to call Leipzig their home. In many cases, we actually suggest that startups going through our cohorts focus more time and energy trying to get approved for federal grants, because sometimes the money can be acquired faster than in investor negotiations; the amounts can also be higher than typical first round investments; and lastly, the money is yours to keep, meaning no negotiations for ownership of the shares, exits, etc.
You’ve just got to be ready to have some discussions, and be prepared to deal with paperwork. And guess what, to be eligible for the max amount of money, your company’s gotta be somehow based in Leipzig! To read some official resources from both the city of Leipzig and one of Saxony’s federal banks, you can check out the two links below, but unfortunately the information is only in German at the time of writing this article:
2. All of Berlin, but none of Berlin
The accelerator I work in is located in one of Leipzig’s most historical landmarks, the Leipziger Baumwollespinnerei.
When you’re located in such a historical place, and deal daily with innovation, you tend to get a lot of requests for… tours. We give a lot of tours. We probably need to hire a tour manager, actually… hmmmm, that is actually not a bad idea…
Ok, so got distracted, back on track now. What I was getting at is that, during said tours, one of the questions we get asked a lot is:
“So, what about Berlin? Doesn’t that bring a lot of competition?”
The simple answer is yes and no. The complex answer is that I love this question, because it is actually quite dynamic. Leipzig is situated roughly 187 kilometers outside of the German capital city. That’s about 2.5 hours by car or bus depending on traffic conditions, and an hour with Germany’s world-famous high speed trains.
Why it’s a disadvantage. There is definitely no shortage of accelerators, incubators, and startup mentors in Berlin. Absolutely not. A lot of these guys are corporate backed, which means they have some serious funding opportunities, and great potential to forge some amazing partnerships with their startups. In a way, this is direct competition for everything offered here at our accelerator in Leipzig.
Why it’s an advantage. Berlin has been a hot bed for startups and technology for the last couple of years. With a reputation like that, what naturally comes with it is quite a surplus in that industry. What does that mean for startups? It means it is becoming harder and harder to be remarkable in Berlin. The corporations, the partners, the accelerators, the networks, all of them are meeting startup founders day in and day out, and a human being can only retain so much information before they start to confuse things.
When you’re in Leipzig, you still have all the logistical things you may benefit from in Berlin, such as meeting with investment firms, or attending important conferences, because you can easily head there in the morning, take care of business, and be back in Leipzig by the afternoon. But at the same time, you’ll be commanding all the attention you possibly can from the growing and thriving startup scene here in Leipzig.
3. Let’s talk a bit more about that Leipzig startup scene, shall we?
Leipzig is currently referred to as one of Germany’s hottest cities as a whole. In fact, the nickname “HYPEZIG” is often used to describe our charming little city. Based on the last official measurement at the end of 2016, the population of the city was just under 600,000 people, and that number continues to grow every day.
That’s great and all, you may say, Leipzig sounds really cool – but what does that really have to do with myself and my startup? Allow me to elaborate.
One unified startup scene
Unlike a lot of major startup hubs in the world, Leipzig is neither detached nor in fierce competition with itself. What do I mean by that, exactly? Well, normally one of two things happens when you have a startup hotbed:
- There is so much stuff going on and so many different players in the game, that a lot of information silo-ing happens. Basically Accelerator X does its thing while Incubator Y does its thing, and the two never share ideas or exchange knowledge, and really have no idea what the other is doing.
- There is so much stuff going on and so many different players in the game, that competition naturally arises. Startups start fighting for attention, or over investors, or over press coverage, or program admittance, or any other combination thereof.
In Leipzig, this hasn’t become a problem yet, and we hope to keep it that way. The great thing about it is that there are really three key players in the Leipzig startup scene. And our goals are different enough that we can quite easily work in harmony with each other, and push the tech and innovation scene in Leipzig collectively, rather than work against each other.
The three main elements in Leipzig are:
- SpinLab – The HHL Accelerator. This is where I manage marketing operations. We’re a dedicated startup accelerator offering a free 6 month program to accepted startups.
- Basislager Coworking. This is Leipzig’s premier co-working space, situated in the heart of the city. They host freelancers and smaller startups from around the world, and conduct many startup-friendly activities in their facility or in the city of Leipzig, such as the famous Startup Safari event, throughout the year.
- Social Impact Lab. This is Leipzig’s primary startup incubator, which focuses directly on young companies looking to make social changes with their products and ideas. They’re right around the corner from us, in the beautiful neighborhood of Plagwitz.
The three of us have three very different business goals, and because of that, we don’t see each other as competition. In fact, the three of us have a very healthy working relationship, and we and our startups are constantly in exchange, to help everyone reach their full potential and bring their dreams and ambitions to fruition.
Educational support for all
Leipzig is home to an abundance of excellent educational facilities, ranging from business management to fine art. So startups have great access to all the events and networking opportunities that the educational institutes can offer, but it also means you can find top notch student workers from almost any field without too much trouble. Because hey, we all know startups would happily love to save money in the early stages, so a couple great student workers would never hurt!
Some big corporate names are setting up shop in Leipzig
Ever hear of DHL, Amazon, and Porsche? Yeah, we thought so; and guess what, all three of the companies, along with many others, have major facilities operating in Leipzig. It’s really a great opportunity to possibly work with some of these big players, or better yet, to earn some of them as customers.
Leipzig is very cost friendly and offers a lot to do!
Let’s face it, money is going to be a concern for your startup in the early phases, and at the time of writing this article, Leipzig’s cost of living is nowhere near the standard of other major German cities such as Berlin, Hamburg, and Munich.
Right now, the average cost for renting a square meter in Leipzig is hovering right around 7.42€. Compare that to Berlin, which is currently at 13.22€; or even worse, Munich, which is reported at 21.25€ per square meter! We’re almost 1/2 the cost of the German capital and nearly 1/3 the cost of living in Munich, yet we offer a quality of life that is comparable, or even in some regards, better.
The city is also home to a thriving art scene, numerous great establishments for eating, drinking, and nightlife, and to end it all, there’s a great lake reachable by bicycle in only 30 minutes! The “Cossi” has real sand beaches, and almost daily events in the summer, and is really awesome for spending what little free time a new startup founder may have.
Introducing the Smart Infrastructure Hub
As if we didn’t give you enough reasons to love Leipzig already, we’ve got one more that is so important that it deserves its own category here: the Smart Infrastructure Hub – Leipzig.
In 2017, the German Federal Government commissioned the Digital Hub Initiative – basically, Germany wanted to find cities to be responsible for certain industries such as Finance, InsurTech, Logistics, eHealth, and so on. The plan was to bring an international spotlight onto Germany, in order to attract the best talents and best companies in these industries from around the world. Leipzig and Dresden combined applied to be recognized as a Hub, and were accepted. Officially, Leipzig is now responsible for Smart Infrastructure, which umbrellas eHealth, Smart City, Energy, and InsurTech.
So if you’re a startup operating in one of these realms, you get added bonuses when it comes to support. Some things that are planned for startups specific to this initiative are:
- A dedicated venture capital fund
- A dedicated startup technology center
- Research & transfer projects in cooperation with Leipzig’s educational institutions
- Specific events and conferences.
Specific to the energy sector, Leipzig is actually home to one of the EU’s biggest energy exchanges, the EEX, which has also committed to furthering this project. We’re all very excited here to see how this nationwide initiative will continue to shape Leipzig and the rest of the country, and now is the time for your startup to be a part of that.
An online startup magazine that is there just for startups in the region
Startup Mitteldeutschland runs an online magazine just for startups operating in Saxony, Saxony-Anhalt, and Thüringen, the three states that combined form the central region of Germany. The online magazine publishes numerous articles weekly on startup activity, including, but not limited to, interviews, startup portraits, startup events, startup tips and tricks, and much more.
The best part about it? Getting your startup or event hosted on their platform costs absolutely nothing for you.
All you’ve gotta do is send an email to firstname.lastname@example.org, telling them who you are and what your startup is doing. As long as you’re based in one of the three aforementioned states, the publication would be happy to feature you in an article on the site.
This is the region’s only dedicated online startup magazine, and is one of the leading authorities on all things startup in the region. Definitely a great way for startups to market themselves.
Get started today – Leipzig wants you here!
In 2018, it’s easier than ever to start a company. All you need is an idea, a website, and a couple euros later you could be officially registered as one. Let geography work in your favor; there is a lot to help you out here in this great little city in Germany. But to take advantage of that stuff, you’ve got to be here!
Easiest ways to get your startup up and running in Leipzig
The first thing you’ve gotta do is just show up. Get you and your team physically located in Leipzig as soon as you can, and start running operations from here. If you’re interested in applying to a startup accelerator program, you can check out 10 great reasons why you should apply for the SpinLab’s accelerator program.
Alternatively, if you are just looking for a base of operations and to start building up your network, definitely reach out to Basislager Coworking. There’s a good chance they’ll have some space available you can rent for a working office, or upcoming events where you can establish your network here in Leipzig.
Lastly, if your startup intends to have a social impact on the world, definitely reach out to the Social Impact Lab in Leipzig to see when their next program will be starting, or what networking events they have planned.
Beyond that, the rest is up to you! Be committed, be passionate, focus on goals, and before everything else, GET STARTED!
By Shawn Segundo
Obsessed with marketing, startups, and themed parties, Shawn eventually made his way from his home country of the United States to Germany and is now running the marketing operations at SpinLab – The HHL Accelerator. When he’s not helping startups scale, he can normally be found trying to learn another language, speaking at some event, or simply just jamming on his ukulele.