Introducing de:hubs

Unlike centralized Silicon Valley, there are twelve separate digital hubs (“de:hubs”) in Germany. Here, foreign founders and investors find the perfect mix of sustainable networks, excellent research facilities, established economies and innovative startups.

February, 2018

Silicon Valley in the San Francisco Bay area has become an internationally recognized brand, the global capital of tech boasting a concentration of IT expertise across different sectors, attracting the most innovative minds, the busiest networkers and big investment. The situation in Germany is different. Here there are several large urban regions that focus on different industries, some of which are tied to the region’s specialties – such as the auto industry in southern Germany, the financial sector around Frankfurt or logistics in the harbour city of Hamburg.

Germany’s economy is supported by its “Mittelstand,” a large number of small and medium-sized businesses (SMEs) including many “hidden champions”, a strong base of established companies and then its excellent universities. These are supplemented by innovative and predominantly international startups: nearly half of all those employed in Berlin’s startup scene come from outside Germany, for example.

What has been lacking in the past is an overarching digital ecosystem to link the individual players that would bolster Germany’s position as a digital heavyweight on the international scene. To remedy this, the Federal Ministry of Economic Affairs and Energy (BMWi) launched the Digital Hub Initiative with twelve “de:hubs.” Each one is both a network and a physical location concentrated around regional strengths, creating synergies that will help to advance digitization.

“We want to strengthen our network and we are positive that this mixture can be very attractive for international founders and investors,” said Brigitte Zypries, then Germany’s Minister for Economic Affairs and Energy. “And that is one of the main goals: convince them to establish their companies and make their investments in Germany. In a nutshell, you can say that we have many “valleys” and we need to connect them.”

A short history of de:hubs

Above all, the hubs aim to put startups and their digital innovations in contact with market leaders and accelerate collaboration on priority topics. This type of cooperation has been successful in the past: according to a recent study by the research organization RKW, 95 per cent of all SMEs would work with a startup again in the future.

The initiative was the brainchild of BITKOM, the German IT industry association, which selected the hubs along with an independent committee of experts from across a range of digital and tech industries. Criteria such as the presence of established world-leading companies and research facilities, an embedded startup community and an overarching vision for the hubs to be international “beacons” played a large role in the selection process.

As an example, Potsdam was already known worldwide as a location for the media and film industry. But its new MediaTech Hub is now striving to attract international attention beyond these fields to “create a local space for innovation in digital transformation beyond entertainment,” according to its chairwoman Andrea Peters. She goes on: “Through the Federal Ministry of Economic Affairs and Energy’s new Digital Hub Initiative we are offering an inspiring and powerful combination of digital technologies, video and mobile capabilities, animation, visual effects, games, interactive media, VR/AR and big data. Potsdam has not forgotten its success over the last ‘100 Babelsberg years,’ [a reference to its famous film studios] but is rather embracing the future and offering an interesting prospect for startups and investors from all over the world.”

Digital Health Hub

However, Germany’s regional cluster model is still relatively unknown outside the country. As the Startup Monitor 2017 discovered, more than a quarter of the startups surveyed did not know about clusters, or if they did, were unsure what industries they represented. In Nuremberg-Erlangen, the immediate challenge of the Digital Health Hub (built on a strong, existing healthcare cluster) is simply to let the rest of the world know it exists. “The Digital Hub Initiative is a great opportunity to increase our international visibility and reputation in the field of digital health in general. Germany has many innovative startups and strong SMEs, but we often tend to be too modest about our ideas,” says Johanna Mathes, project manager for the hub. “The Hub Initiative helps us to make the ‘Digital Health Made in Germany’ brand known all over the world.”

With its global network and expertise in attracting investors, GTAI is making the Digital Hub Initiative visible abroad and recruiting a complementary mix of startups and investors. The ultimate goal is to make “de:hubs” an international brand that is distinct from the Valley in that it offers access to a range of ecosystems unique and specific to Germany.

»Continuously monitoring trends and innovations«

Interview with Josefina Nungesser

You’re head of the new Trend & Innovation Scouting division at Germany Trade and Invest (GTAI). What is it exactly?

Our primary task is to boost the competitiveness and digital transformation of Germany and, in particular, that of SMEs by attracting international digital pioneers (startups, innovators, investors etc.) to our country and, if possible, integrating them into one of the 12 digital hubs.

What role does the GTAI play in the Digital Hub Initiative of the Federal Ministry for Economic Affairs and Energy (BMWi)?

A decisive one – as GTAI and in particular the Trend & Innovation Scouting division is in charge of the internationalization strategy of the Digital Hub Initiative. In my opinion, the success of the initiative strongly depends on whether we manage to market the hubs abroad in a way that convinces innovators to cooperate with or settle in one of the hubs for the long term.

What is the role of your division within GTAI?

My division is key to the company gaining new expertise. By continuously monitoring trends and innovations, and building new networks for international innovators, we become valuable advisors on the topics of digitization, startups and innovation.

Photo: GTAI