Innovative region: Germany

“The uniqueness of Germany’s innovation ecosystem comes, if at all, from cultural and historical consequences and the geographical realities,” said Crispin Leick, managing director of EnBW New Ventures (ENV), Frankfurt-listed energy utility EnBW’s corporate venture capital (CVC) arm. “Germany is low on natural resources, the climate is ambient and allows for good working conditions and many of the largest German companies are direct descendants of a strong founder generation 100 to 150 years ago. “Compared with other German-speaking European regions, there is only the size of the German market that leads to valuation differences, in my view. Comparability to Silicon Valley does not exist and all the managers travelling there in the past years can only take some ideas from it to transform it to the reality in Germany or Europe.” Corporate VC investment volume in Germany peaked in 2019 at roughly $3.6bn across 86 deals, but dropped to $1.8bn in 80 rounds the year after, probably due to covid-19-associated factors. Corporate exits topped in 2020 logging nearly $1.4bn, up from $150m the year before; however, the 2019 figure is probably because of multiple acquisition transactions of undisclosed size. The CVC-backed portfolio companies that went public or were acquired were mostly in the IT sector, followed by healthcare, financial and consumer technology developers. Jens Busse, an investment manager at Evonik Venture Capital (EVC), the corporate venturing unit of Essen-headquartered speciality chemicals provider Evonik Industries, added: “We see in Germany a unique ecosystem of CVC units. Even if the absolute numbers of CVC investors in the Silicon Valley (149) is higher than in Germany (99), the ratio of CVC investors to VC investors in Germany (13.4%) is significantly higher than in the Bay Area (6.9%) and Israel (5.3%). “With this high density of CVCs, these units are working closely together, cross-industry and across the value chain, so that startups can profit from the ecosystem. These networks are actively managed by the government, for example, through the High-Tech Gründerfonds. “With their global reach, the German CVC units open the global market for their portfolio companies. With a big footprint in all industry sectors such as automotive, chemistry, pharma, software, energy and finance, the diversity of investors is much higher than in other areas, as the focus in Silicon Valley is mainly on software, communication and networking, hardware and commercial services and for Israel software, communication and healthcare. “In comparison, Germany is lagging in the absolute number of CVC deals (266 in the…

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Edison Fu

Edison Fu is a reporter and Asia liaison at Global Corporate Venturing.