One of the interesting things about the growth of entrepreneurship in Germany is how it contrasts with the long-standing image of a country based on an old-fashioned and staid corporate economy. Indeed, it’s hard to reconcile the international, young, fresh, creative Berlin startup guy with a suit-wearing, middle-class professional from Munich or Cologne.
But now one new seed VC firm wants to help these doctors, architects, professors etc to get involved in the startup scene. The German Startups Group (GSG) is building a portfolio of investments in entrepreneurial companies, and eventually anyone will be able to buy shares in GSG itself – thus opening up an asset class which was previously all but closed to off to ‘normal’ investors.
And Berlin, the founders believe, is the best location in the world right now for such an enterprise. Christoph Gerlinger is the CEO of GSG. He said: “Berlin is definitely the ‘hottest place to be’ right now where the startup scene is concerned; and this despite the limited availability of venture capital for businesses during the seed stage. As a result, shares in Berlin-based startups are significantly more affordable than, for example, in Silicon Valley.”
Add to that a large pool of highly-skilled, international creative talent and the city’s comparatively moderate salary range, and you end up with a promising mixture which GSG hopes will appeal to investors. Christoph added: “We give private investors who buy our shares the opportunity of owning a piece of the pie in Germany’s attractive startup scene. This gives them the opportunity to participate in capital gains in Germany normally reserved only for entrepreneurs themselves or VC professionals.”
And investors can do this without having to go through what would otherwise be a long and convoluted process involving research and evaluation of potential investments, negotiations, drafting contracts, due diligence, continuous monitoring and so on.
It also means investors can acquire a risk-diversified portfolio rather than having to focus all their money on one startup.
Although GSG is keeping its cards fairly close to its chest for now, it has already identified several investments, and hope to have compiled an initial portfolio by 2013. The two founders, with Christoph joined by Alex Kölpin, also want to expand their team and network and work together with other VC firms and Internet platforms in the Berlin ecosystem in order to make the whole package available to investors.
It’s a fascinating idea, and offers up a tantalizing prospect – despite the euro crisis, Germany is still an extremely wealthy country, and the startup scene would benefit tremendously from tapping into the resources held by ‘ordinary’ Germans.