When Hamburg was chosen as the location for Plug and Play’s European supply chain and logistics headquarters, it was an exciting moment for the city.
For Livia Toth, ventures director at Plug and Play Hamburg, the decision was remarkably straightforward.
“The different stakeholders from academia, industry, the government and start-ups really work together,” she says. “That is why it was easy for us to come here and create a network: we weren’t seen as invaders that wanted to take away the start-ups; rather, we were seen as an important piece of the entire ecosystem, bringing fresh blood and the venture capital spirit of Silicon Valley.”
Scaling new heights
Germany’s ‘gateway to the world’ is one of Europe’s oldest, most important trading centres. In recent years it has also emerged as an increasingly vibrant start-up hub, now home to more than 1,200 ambitious young businesses across an array of sectors.
In 2018, Hamburg was chosen as the most appealing German city for a career start in Deloitte’s Digital Hubs survey. This year, the city broke into the top half of EU-Startups’ biggest start-up hubs index for the first time.
From mytaxi to Xing, many businesses incubated in the city have gone on to find international success. Hamburg’s unique ecosystem relies on the interplay between fledgling organisations and their more established counterparts.
“In Hamburg, the future is built on tradition,” explains director of Hamburg Invest’s Startup Unit Veronika Reichboth. “We believe that start-ups are most successful when they are linked with the old economy, using new technology to initiate progress in existing industries and equip them for the future.”
When Toth moved to Hamburg ten months ago, she quickly realised there was something special about the place. Despite being the second-largest city in Germany with a population of just under two million, the sense of community spirit was palpable.
“What I realised is that for Hamburgians, they are so proud of their city and they really want to make it prosperous and successful,” she says. “Something that really stood out for me is that they are happy to work together and join forces – they are not individualistic.”
This sentiment is echoed by CEO of Lignopure Joana Gil Chavez, who arrived in 2016 for her PhD at the Hamburg University of Technology. During her studies, Chavez and her research partner developed the technology to transform raw lignin into powders for use in sustainable care products, food ingredients and bio-based fabrics.
In September 2019, with the pair ready to register their company, staying in Hamburg was a no-brainer.
“It wasn’t until I got here that I saw how much interaction there is between the universities and industry, which changes everything,” says Chavez. “Coming from a scientific background, I would definitely recommend Hamburg to those with new ideas for products or technologies.”
Open to ideas
For Chavez, the city has another major pull factor that goes beyond its business benefits. “The people here are really open and welcoming,” she explains.
Hamburg’s diversity also struck co-founder and CEO of Foviatech Sowmya Thyagarajan, who, like Chavez, moved to the city in 2016 for her PhD.
“I was surprised by how international Hamburg is: there are so many people from different countries and traditions,” she says. “This is a favourable situation for me, because I am a woman entrepreneur, who is not from Europe – I am from Asia.”
On completing her studies, Thyagarajan co-founded Foviatech, which uses digitalisation and smart automation to transform the transportation and healthcare industries.
Hamburg’s status as a trading hub with leading aviation, shipping and healthcare sectors played a key role in her decision to stay.
“On top of this, the people are ready to use new technologies and try new things, which is really important when you consider a start-up: innovation, creativity, ideas,” she explains.
A helping hand
Hamburg is home to a multitude of public and private initiatives for nascent businesses. At the heart of this support system is Hamburg Invest’s Startup Unit, passionately led by Reichboth.
“In recent years, Hamburg has taken major steps to create a flourishing ecosystem for start-ups,” she says. “We see ourselves as the main port of call for all questions regarding municipal start-up programmes, financing opportunities as well as relevant events and networks in the region.”
This has been crucial for new businesses like Lignopure. “They really take you under their wing,” says Chavez. “They are so active and willing to help – I don’t know how they manage it because of course, there are plenty of start-ups.”
Chavez and her co-founder managed to secure €150,000 in funding from the Hamburg Investment and Development Bank as part of an initiative supporting new businesses working on sustainable products. “They actually contacted us, and said, ‘we heard about your company and we think you should apply to this programme’,” she explains.
Then, there is Plug and Play, an early-stage investor that provides new businesses with between €50,000 and €250,000 to help them grow. In addition, it runs a traditional accelerator programme that connects Hamburg’s start-ups with large corporations.
Plug and Play’s global footprint creates a valuable opportunity for new companies looking to expand beyond Hamburg and become international players.
“Especially at the beginning, start-ups need a lot of guidance,” says Toth. “We have hundreds of mentors that we have been working with since our inception – former executives, serial entrepreneurs, from the venture capitalist world and academia – that are happy to mentor our start-ups.”
Innovation in a crisis
The outbreak of Covid-19 has shaken nascent businesses across the world, making this type of support more important than ever before.
Despite the pandemic, Toth is keen to stress that Plug and Play’s investments in Hamburg’s start-ups are not slowing down. In fact, she is excited to see what is next for the city by the River Elbe.
“Don’t forget, when we had the financial crisis in 2008 some really exciting companies were born,” she says. “Every time there is a crisis – and the pandemic really is a new type of crisis – it also opens opportunities for new business models and markets which need to be filled.”
Start-ups like Lignopure are stepping into this space, ready to further consolidate Hamburg’s standing as a key player in delivering sustainable investment and innovation.
“The market for cleaner, bio-based products actually accelerated during the pandemic and is not showing any signs of stopping,” says Chavez. “For us, this year has been really positive.”
The city’s blossoming biotech sector is just one area to watch out for post-Covid-19. In times of crisis the crucial factors necessary for start-ups to grow are thrown into sharp relief. Over the decades, Hamburg has built a culture based on innovation, collaboration and support. Although the philosophy may be simple, the city’s rich and varied ecosystem is proving anything but.