This article first appeared on May 6th and particularly interested a large number of readers.
Anyone can set up a business, just like that – they just have to come up with an idea, go to the notary, and the company is ready. This is the German version of the US legend of the dishwasher who becomes a startup millionaire. But with every headline about discrimination and a lack of diversity in the scene, it gets more scratches.
Julia Kümper and Verena Würsig don’t believe it’s that easy either. Kümper is the managing director of the Venture Villa Accelerator, Würsig runs the Includivo start-up and funding consultancy. Together they have started a new incubator: Ventreneurs should help all those people who are currently falling through the cracks when setting up a business in Germany. In an interview, the two reveal who that is and how the startup scene lets them down.
Verena and Julia, according to your website, your vision is: “Reasons for everyone”. Can’t everyone in Germany start a business?
Verena Würsig: In theory, of course, everyone can do that. But practically many people face obstacles. This can be due to the origin of a person, the educational or migration status or the personal health situation. At the same time, the start-up and investor scene preferably feeds on itself: what you know, you support. That’s why we say: No, not everyone in Germany can just start a business like that.
When asked the other way round: Who can do it?
Worthy: In this country, it is mainly people who start up who can afford to study. What has become even more dramatic in the pandemic because many part-time jobs that might have financed the university are no longer available. This is also an entry barrier because the potential investors themselves often come from a very privileged educational background. Many used to be analysts or auditors. A scene like in the USA, where people were founders in their early twenties, quickly had a lot of success and luck and quickly became VCs themselves, that hardly exists in this country. Our venture capital staff is very established and always remains in the same structures and the same environment.
Julia Kümper: You also have to be able to afford to become a VC or to raise your own fund. How long it takes to establish the fund and then to distribute it simply requires a certain financial cushion and network.
So is the startup scene not only too white and too masculine, as one often hears, but is there also an imbalance in terms of social status?
Kümper: Yes. They always say, ‘What’s the problem? Anyone can found a reason. You just have to go to the notary and make a euro capital contribution for a UG. ‘ But that’s bullshit. You also have to pay the notary and accounting costs from this share capital. It is not realistic to set up a company for less than 5,000 euros in Germany – under liability law. But for many in the startup scene that is no longer a sum that they are even thinking about. There is a lack of awareness that this is a privilege.
Sounds like many startup business models, which at first glance only solve luxury problems: Personal life experience – or that of one’s own milieu – is declared to be universally valid.
Kümper: Exactly. To put it bluntly: The founding geniuses want us to believe that the whole world has the same problems – and that they know the solution. The universal claim is: ‘I know what is good for you.’
Can the problem that certain groups are not sufficiently represented in the startup scene be solved by having more role models – for example, more female founders on conference podiums?
Kümper: Role models are important, but people also need to relate to them. It doesn’t help if a person is put forward whose reality of life has nothing to do with your own. The investor with a full-time nanny can only partially be a role model for a single mother with a low income. A self-affirming, above all mutually empowering network emerges between those who sit on the conference podiums. That is legitimate, but just another form of capital concentration.
Worthy: And there is a risk of losing sight of what is really going on in the realities of life for individual people if you keep saying on some stage: ‘If you have an idea, just start up!’
So how do you intend to solve the problem that not everyone can found?
Worthy: There has to be a way for very individual founders. For example people who have a health problem. That is why they are no less committed than others, just maybe not every day, but in spurts, if you think of people with multiple sclerosis, for example. The solution cannot be to look at such start-ups with an ROI lens alone or to assume that these founders cannot be just as good or committed entrepreneurs. We claim that most people from these supposedly difficult target groups are even particularly motivated and committed.
And how are you going to help them?
Kümper: We want one Blended Value Incubator away from valuation using the purely monetary approach. We don’t want to match capital with companies, but with people. The idea is to remove the legal and social barriers by first employing people and thus enabling them to evaluate their ideas. Quasi a pre-seed phase in employment. Then we can approach donors as an incubator and say: Look, this is actually an investment case, also for venture capital.
So venture capital still plays a role after all.
Kümper: In any case, we are not a charity. And of course we have to get some money first to prove it. We want a redefinition of what is value – and that in the existing system. I know that sounds paradoxical. But we are in a transition, one cannot say overnight: We are all pulling into the repatriate courtyard and rejecting capitalist coercion. Only very privileged people can afford that.
How could that look in a specific case when someone goes through your program?
Kümper: It could be a non-EU citizen studying in Germany. With her visa, she is not allowed to start a business while studying, and if she has her degree and wants to start a business, she needs a different type of visa. Getting that can take a year. You also have to prove 10,000 euros on the account and the immigration authorities decide whether they consider the submitted business plan to be economically viable. Our approach would then be to say: If we employ you with us, you will immediately have a German tax number and an employee visa, for which you do not need 10,000 euros on the high edge and no economic review of your business plan.
Worthy: Or a solo founder who does not get any venture capital because it is said: ‘He’s alone, the risk of default is too high.’ We could offer a C-tandem, i.e. act as co-managing directors and step in if necessary. In other words: minimize the risk for the lenders.
And what do you get from it financially?
Kümper: In our ideal, it goes in the direction of loans or profit sharing. Of course, we are also happy to take shares, but we do not want to take advantage of the emergencies that people sometimes face. First of all, however, we need start-up financing in order to get a rotating system and to be able to ensure a certain flow of capital. We are concerned with income, not exits. We don’t want to make millions with it personally.
That means: Social startups non-stop?
Kümper: No. We have no right to judge someone and say: We only give you money if you do something ‘better’ than everyone else.
Worthy: If someone with us has the potential and says he wants to become the next unicorn – then he should do it in God’s name!