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VIPsight

Corporate Governance – portrayed in the individual cultural and legal framework, from the standpoint of equity capital.

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The German Mittelstand

 

According to a recent survey, it emerged that one in every five researchers in academia is thinking of setting up in business. Conducted by the Institut für Mittelstandsforschung of Bonn among 6000 researchers in 73 universities, the survey was viewed positively as regards German SMEs; the establishment of a new company is “a very important step in the constant renewal necessary to the implementation of our economic policies” commented Dr. Jörg Zeugner, Chief Economist of the KfW banking group. Researchers possess the innovative knowledge that constitutes a perfect base for launching start-ups in the field of technology. The path between mulling the idea and actually setting up is often fraught with hazards and risks; the pioneering spirit is often stifled by a need for security. The current edition of "Mannheimer Gründungspanel" is a survey by the Zentrum für Europäische Wirtschaftsforschung (ZEW) and Creditreform Wirtschaftsforschung according to which more than 20 percent of young companies set up in Germany between 2010 and 2013, is treated by at least one of the founders as a second job – they make their living doing something else.

This is especially true of companies set up by researchers, of whom a higher than average percentage will rely on another source for their livelihood, and who develop their start-up alongside it.

48% of companies with a researcher among the founders is developed as a sideline, and in start-ups with a high technology content, the figure quoted is said to be no less than 71 percent. The findings of the survey coincide with results obtained by research conducted by KfW. In 2014, the number of recently launched companies rose by 12 percent in Germany ­mainly as the result of the sideline option.

German research centres are clearly highly fertile terrain for the development of innovative high-tech products. In developing these to industrialisation and marketing, German universities and research centres work as a team with funding earmarked for start-ups. This bridge between science and economics ought to lead to more companies being set up as a main activity. Being able to count on a reliable source of finance is essential, but it is even more important that the management team be made up of members who, in addition to scientific knowledge should be familiar with financial matters and have awareness on how the market works. Many start-up companies that get launched on the new market are not short of money but have no skills in creating sales networks able to take the product on to the market.

One example of a fortuitous combination of good luck, financial expertise, entrepreneurial courage and innovative know-how is the biotech company Biofrontera. Set up in 1997 by a scientist, it was the first small German biotech company to be authorized to develop and market a product in accordance with the centralized European procedure to combat skin cancer. This medication is now on sale in Europe and Is currently nearing FDA approval for sale in the United States.