Development of the “Next Generation Mittelstand”

Adrian Thoma and Eric Heintze, Gründermotor Management (left to right)

Baden-Württemberg is one of Germany’s economic engines. The middle class admired by many other countries is particularly well represented here – there is a “hidden champion” in almost every major city. For some time now, it has been about connecting startups with established companies.

The reason: Baden-Württemberg’s startups were only able to raise 3% of the 17 million euros in venture capital in the boom year 2021. 60% of this money ended up in Berlin and 26% in Bavaria. In terms of the number of deals, “The Länd” is only in fifth place according to the EY Startup Barometer, behind North Rhine-Westphalia and Hamburg – and this for the third year in a row. However, these warning signs were already recognized a few years ago and active countermeasures began in Baden-Württemberg. In 2018, Prime Minister Manfred Kretschmann issued the slogan that a new entrepreneurial spirit should be ignited in Baden-Württemberg. Special attention should be paid to the regional structures of the southwestern federal state: Because there are no large metropolises in which the founders are concentrated – such as Berlin, Munich or Hamburg. Instead, the region has many sites and initiatives with different focuses.

Network and re-energize

The idea then was to intelligently connect these existing activities and at the same time launch new initiatives. “Ecosystems always need a critical density of talent, experience and money,” says Professor Dr. Alexander Brem from the Institute for Entrepreneurship and Innovation Research at the University of Stuttgart. Since the launch signal four years ago, intensive work has been done on this very necessary density and networking. One of the driving forces is Dr. Helmut Schelling, who founded Vector Informatik GmbH in the 1980s. In 2014 he stepped down from the management of the most successful company and, with great personal commitment, undertook to support research projects in Baden-Württemberg on climate protection issues in transport and STEM innovations. Since its establishment in 2011, another focus has been on education for students, student teachers and teachers through the promotion of STEM projects. Overall, the focus is on improving education in the fields of natural and technical sciences – in order to promote the respective innovations and start-ups. The Baden-Württemberg Ministry of Economic Affairs is responsible for the general “Start-up BW” campaign. This includes the “Gründermotor” initiative launched and funded by the Ministry of Science.

A “new middle class”

Baden-Württemberg’s approach to the state’s starter motor initiative delivers value in the long term. “We do not intend to create new unicorns, nor are we purely exit-driven in our operations. We think long-term,” says Dr. Schelling. Rather, the creators behind this initiative are interested in laying the foundation for a kind of “new generation of medium-sized enterprises”. In principle, the previous successful model of Baden-Württemberg should continue – adapted to the new requirements arising from technological progress, changes in management methods and the flexible thinking of start-up founders. “We are concerned about the creation of further successful companies and future hidden champions – with suitability for grandchildren due to a long-term business model,” explains Professor Dr. Nils Högsdal, Prorector Innovation at Media University Stuttgart. The already existing decentralized centers of power of the economy should continue to be used. “We’ve got a lot of embers – not a big fire – and we’re taking advantage of that. Our strength lies in diversity,” says Professor Dr. Hogsdal further. He sees fragmented structures as an asset rather than a roadblock to success.

About 160 partners from business and science

The Gründermotor platform was launched in 2018 by the University of Stuttgart, Vector Informatik and Pioneering Spirit GmbH. It also receives support from the state government of Baden-Württemberg, among others. As a result, the network has expanded significantly. Major companies such as Vector Informatik, Festo, Stihl, Trumpf, Mahle, Bosch and EnBW are involved in projects. In total, the network managed to attract more than 160 partners from business and science. More than two-thirds of all universities in Baden-Württemberg are now part of the initiative. The state-wide network will soon be established connecting different hubs in the Stuttgart, Rhine-Neckar, Baden, Lake Constance and Danube-Alb regions. Thematic groups can also be created to create synergy and improve knowledge management.

Unusual but successful

Gründermotor’s main goal is to bring together science, founders and medium-sized companies. This idea itself is not new. However, the path in Baden-Württemberg is unusual and successful at the same time: the “master class”. Here startups meet experienced founders, experts and company representatives from the partner network. “We knew early on that the best guides for founders are other founders,” says Dr. Eric Heintze, Founder Motor Platform Lead and Head of Scouting. The program includes individual coaching, group training and exchanges with entrepreneurs. Founders should learn how to bring their startup to investment maturity and how to develop new solutions together with companies. Start-ups and entrepreneurs work together intensively in the “master class” for four months in two sub-programmes.

90% success rate.

“Depending on their experience and goals, we support teams primarily in an investment or project-oriented development. Our goal is to prepare startups for pitches to potential investors and strengthen their business model,” continues Adrian Thoma, CEO & Co-Founder of Pioneering Spirit GmbH and Co-Founder of Gründermotor. It would also be about closing the gaps in the business model. In addition, initial contacts will be made with investors and customers from industry and medium-sized enterprises. Success proves that the idea is right: As of 2019, more than 70 teams have completed the master class in seven series, and about 90% of them have received follow-up funding. Our own investment network also helps here.

Data-driven matching

There are now more than 3,500 start-ups from Baden-Württemberg in the Gründermotor database. With a very data-driven approach, the initiative ensures that suitable start-ups and established entrepreneurs or mid-sized companies are brought together. This matchmaking based on detailed company profiles and requirements is important preliminary work in order to achieve the best possible and promising cooperation. It’s about building bridges to sustainable success and bringing the best of both worlds together. Cooperation between startups and companies could also lead to the development of solutions for subsequent company successions: Because if you have already collaborated on projects, then there is a basis of trust.

the idea works

In the few years since the program started, several startups have already made a breakthrough. This includes, among others, alpha protein from Bruchsal near Karlsruhe. A new technology makes it easier to breed mealworms and then use them as a sustainable source of protein. In addition, unused products from the food industry are used so that resources can be saved. The company Markt-Pilot has developed software that provides machine manufacturers with complete transparency for all spare parts. In this way, previously unrecognized value potential can be exploited. In April, Markt-Pilot secured seed funding with a volume of €6.2 million.

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