The academic system of the Gründerzeit after 1871 was not only well funded, partly thanks to reparations payments from the Franco-German War. It was also surprisingly permeable at the interfaces between science and industry. Professors led their chairs in a manner that was as business-oriented as we tend to see today at elite American universities, which in turn closely studied the German system at the time. Doctoral students moved from institutes to newly founded companies and back again when necessary in a flexible manner. Bayer, Daimler, Siemens and BASF were founded with exclusive intellectual property. Today, they would be categorized under the IP heavy startups category. And they received generous start-up financing from the state. The return on investment of the late German Empire was an economic boom that not only secured Germany’s place as an economic superpower, but also financed the establishment of an exemplary welfare state.

Not every outstanding scientist needs to found a deeptech startup. But we must provide much more support to those who want to do so. When researchers present a business plan for a spin-off to the licensing department of their research institution based on their research results, they usually face lengthy negotiations. These negotiations often result in restrictive conditions and high parent company shareholdings, which remain a millstone around the neck for the remainder of the company’s history. In the USA, silent partnerships with university investment vehicles in the amount of three percent are common. This gives founders the freedom to form international champions with private venture capital. Here’s the good news: With the transfer alliance, the licensing game is finally gaining momentum in Germany as well.

Intellectual property, of course, is only one aspect of the utterly formal madness that founders in general and sciencepreneurs in particular have to contend with. In most cases, a solution can eventually be found with a lot of time and effort. However, legal and bureaucratic hurdles – from excessive data protection to documentation requirements to labor law – are one of the two biggest competitive disadvantages facing German innovators. We need fast-track procedures for technology startups and one-stop shops for all legal issues. The second major competitive disadvantage for the highly innovative world champions of the future is access to capital.

German startups do not die in the founding phase, at least not due to a lack of capital. As a rule, they fail when the technology has proven that it works and is then intended to conquer global markets. While American and Chinese competitors collect hundreds of millions in later financing rounds for their growth phases, German companies have to make do with fractions – or relocate.

Part of the solution is an integrated European capital market. This also includes a European tech stock exchange, which enables growth companies to become capital market-ready without having to go to New York or London. At the same time, we need to mobilize our pension funds and insurance companies. While American pension funds naturally invest in venture capital, German institutions hide behind regulatory excuses. This is not only hostile to returns, it is hostile to innovation.

Incidentally, the same applies to the reluctance of large European companies to take over aspiring start-ups (Davids) and then help their technologies and products achieve global success with the sales opportunities of a globally networked Goliath.

A new pact between the state and private capital can make an important contribution here: The state provides partial guarantees for late-stage investments, private investors contribute know-how and networks. In this way, German deep-tech companies also have access to the deep pockets necessary to turn a scientific breakthrough into a globally successful company – just as Özlem Türeci and Uğur Şahin used the findings of mRNA research to form the global Playser Biontech.

The alternative is also obvious: Our best minds develop exciting technology in Munich or Heidelberg, Hamburg or Berlin – and then sell it to Chinese or American corporations or investment funds. Today, around 80 percent of the companies co-financed by the High-Tech Gründersfonds (HTGF) are acquired by foreign investors when they exit. This means that the majority of the value added also leaves Germany.

In many conversations with politicians and representatives of large German companies, we perceive a fundamentally pessimistic attitude. They believe that Germany and Europe are destined to fall further behind in the race against the tech superpowers of the USA and China. Maintaining the status quo would already be considered a success. This pessimism is not only the best guide to turning the descent into a self-fulfilling prophecy. With a sober look at resources and potentials, it is obviously nonsense. The course of events is not predetermined, but rather the result of decisions and actions.

The necessary steps towards a successful economic future for Germany thanks to high innovative strength are well known. The Draghi Report of autumn 2024 has systematically outlined them for Europe. Here they are in a nutshell: Reduce regulation, increase investment, promote potential disruptive innovators and then let them get on with it. However, the basic prerequisite for society to become a world leader in innovation is a return to the technological optimism of the late German Empire and the young Federal Republic.

The current over-regulation in Germany and Europe is an expression of fear and mistrust, fear of the future and mistrust of individuals in positions of responsibility. If we as a country and continent overcome fear and mistrust as our default setting, many new world market leaders in new industries will once again hail from Germany. We have the scientists and the engineers, and we have the capital. Whether we want to be back at the forefront of the big innovation game again is not a question of knowledge, skills or resources, but one of ambition.