German founders debate bureaucracy's startup
A social media post by Stripe CEO Patrick Collison has reignited debate over whether Germany's bureaucratic and legal procedures, including mandatory
Stripe CEO Patrick Collison posted on X that a German founder told him stories of the challenges faced by startups are 'understated.' The founder described a mandatory notary reading of a 90-page investment contract costing €30,000 for his first company, leading him to incorporate his second company outside Germany.
Collison's post sparked a wave of agreement from other founders. They shared similar experiences of lengthy, expensive notary sessions and pointed to systemic issues like complex tax, VAT, and employment laws as deterrents. Florian Huber, cofounder of German accelerator EWOR, warned on LinkedIn that such burdens are pushing founders to register companies elsewhere, creating 'devastating second and third order effects.'
Rejecting defeatism
Not everyone views bureaucracy as the primary obstacle. Torsten Reil, cofounder of defence tech startup Helsing, argued on a recent podcast that ambition matters more than regulation. 'Everything else is excuses. Regulation doesn't matter. Yeah sure it takes longer to start a company in Germany.' he said.
Judith Dada, a senior partner at VC firm Visionaries and co-CEO at AI startup Langdock, agreed on the need for urgent change regarding labour laws, energy costs, and bureaucracy. However, she rejected a defeatist attitude. 'I join your harsh criticism - I reject your defeatism entirely,' Dada stated, emphasizing that Germany still has much to offer. Christian Miele, a VC investor at Headline in Berlin, concurred, stating bureaucracy is not the main reason Germany lacks more world-class startups, pointing instead to a need for a more ambitious mentality.
A persistent problem
The criticism is longstanding. Founders have complained for years about burdensome paperwork and archaic procedures. 'Everything I do as a founder, for formalities, feels like I'm building a factory for metalworking in the 1800s,' Berlin-based founder Jérôme Bau told Sifted in 2024, describing a non-digital, paper-heavy process.
Funding success despite hurdles
Despite these issues, German startups continue to attract significant investment. Data from Sifted shows that from January through July, three highly touted startups-defence tech firms Helsing and Quantum Systems, and robotics maker Neura Robotics-accounted for a substantial portion of all funding raised in the country. For more detailed figures on startup performance, you can explore our stats and standings pages.
| Startup | Sector | Share of Total German Funding (Jan-Jul) | Amount Raised (€bn) |
|---|---|---|---|
| Helsing | Defence tech | Part of 44.3% total | Part of 3.83 total |
| Quantum Systems | Defence tech | Part of 44.3% total | Part of 3.83 total |
| Neura Robotics | Robotics | Part of 44.3% total | Part of 3.83 total |
These three startups collectively raised €3.83bn, which represents 44.3% of the total €8.64bn raised by all German startups in the period.
The online debate, sourced from Sifted, continues to highlight a critical tension for entrepreneurs in Germany: navigating entrenched administrative systems while striving to build innovative companies. For insights into the teams behind these ventures, visit our squad page.
