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Munich Stakes Its Claim as Europe’s Budding Silicon Valley

Munich emerging as a tech hub - Photo Credit: Getty Images

It’s Thursday morning at Munich Urban Colab, a new coworking space and startup accelerator for mobility companies, and Michael Masnitza, co-founder of electric car charging station startup ChargeX, is getting ready to make his pitch. 

Masnitza’s presentation on modular charging stations is taking place one floor above the company’s test site in the basement parking garage, where seven charging spots offer the public a chance to test out the product and help integrate the Colab into the local community. “Basically, the whole concept of the Colab is co-innovation and co-creation,” he says. “So today, we are presenting our innovation case.”

This is not the old Munich of insurance and electronics conglomerates, big banks, and traditional automakers. Lately, the city is making a name for itself as one of Europe’s major tech startup hubs, with a growing focus on autonomous driving and next-gen mobility solutions. In addition to the opening of the Colab—a gleaming, four-story building designed to help unite entrepreneurs, city representatives, investors, students, and teachers—the city recently welcomed the addition of two autonomous driving startups, including Argo AI, the autonomous driving tech company headquartered in Pittsburgh, and recipient of a $2.6 billion investment from Volkswagen. The federal government has placed its Digital Mobility Hub here, connected to the Technical University of Munich (TUM). And the success of mobility startups like Flixmobility or Cluno has lured global venture capital investors to the area.

Some observers have even begun to make the comparison that Munich is to Silicon Valley as Berlin is to New York. That is: a center of free-thinking innovation and technical prowess, versus a hotbed of finance, fashion, and culture. That change has been accelerated with the settling down of American tech giants like Apple, Facebook, and Google, each of which has opened local offices within the last 15 years.

“With the big companies and the big push in startups, it challenges us to dare to dream bigger,” said Florian Petit, founder of lidar developer Blickfeld. “That is something new. There are bigger investments being made, and this fresh air allows entrepreneurs to dare more, and to build bigger and better organizations.”

Yankee Inspiration

Dr. Isabelle Garzorz, a co-founder of cogniBIT, a startup specializing in traffic simulations for autonomous vehicles, began to see a change in Munich’s startup culture about a decade ago, when companies like Google and Apple entered the scene. These titans shook up Munich’s burgeoning startup community by connecting emerging companies to more adventurous investors and to a work culture that valued risk-taking and idea-sharing. 

“It’s good to have this American style of companies growing fast from ideas,” Garzorz says, “because, as a young startup, I feel like in Germany it’s not as easy to get VC funding.”

“In my opinion,” said Florian Bogenschütz, Managing Director of Munich-based startup accelerator Wayra,“what happened is people started looking at Google and Apple, and suddenly realized the possibility that you can create a corporation out of a startup.”

Something similar has happened in the local automotive industry, says Gartner analyst Pedro Pacheco, who is based in Munich. Although in this case, it’s larger companies that are seeing the value in incorporating a startup mentality. Pacheco pointed to Volkswagen’s investment in Argo AI as a recent example of a young startup further energizing a large corporation. American companies like Argo, he said, “are helping to change the culture of these automotive companies.”

While there’s more work to be done to make it a European Silicon Valley, Pacheco noted that Munich has the potential to become the hub for autonomous driving in Europe. “Germany’s new autonomous vehicle law and forthcoming regulations will help open the door for companies to commercialize the technology and use Germany as a testing hub. When other European countries catch up [with regulations], it will be easier to export from one country to the other.”

Fueled by Academia

Bogenschütz sees similar potential for Munich as an epicenter of tech, noting the proximity of global corporate players, wealthy individuals who serve as angel investors, research institutes like Fraunhofer and Max Planck, and organizations like UnternehmerTUM. “We have a strong community here in Munich where people talk to one another and form strong personal networks. It’s just people business,” he said.

He pointed out that starting a company is always complex, particularly in Germany with its rigorous bureaucracy. “If you have a good community, you can just ask another founder, how did you solve this, what kind of tool did you use? I strongly believe this is super important, and this is something that makes Munich really strong.”

Petit pointed to the robust academia scene in Munich, including TUM and the Ludwig Maximilian University, which offer advanced degrees in computer science, mechanical engineering, and robotics–everything relevant for innovations in machine learning and AI. “There are also a lot of high-level research institutions like Max Planck, Fraunhofer, the German Aerospace Center, and companies spin off of or start up out of these institutions,” he said. “That is also very important, because they are sometimes even closer to companies than universities are.” (Proof of this dynamic came when Argo AI recently hired TUM professor Laura Leal-Taixé to be a principal scientist at the company.)

CogniBIT cofounder Garzorz said Munich’s close network of incubators for automotive startups helped her launch her company. “Just knowing there are so many developments, it gives you the idea that this is the place where things are going to happen,” she said.

For Masnitza, it’s about using a space like the Colab to build that entrepreneurial spirit across the whole country. “For us as Germans, it’s of course very hard, because after the Second World War…we got into a very corporate world. Germany is a corporate country. We don’t have that startup mentality [yet].”

From his perspective Munich is poised to take the lead in the innovation economy, in part because it’s learning to accept—and even welcome—the concept that only fierce competition can move technology forward. “It’s all about the state of mind,” he says. “You only get that state of mind if you’re around people that have the same spirit.” 

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