3 ms·

German law makes the "out of the garage + Angel investor" start-up culture impossible. The only possible way is to make money AND start out with a huge amount o

German law makes the "out of the garage + Angel investor" start-up culture impossible. The only possible way is to make money AND start out with a huge amount of cash. I can't speak for other Euro countries.

jdimov9 11y ago
How so?
SyneRyder 11y ago
Berlin seems to be bursting with startup culture, between all the co-working locations & Soundcloud & 6Wunderkinder acquisition. Are the German startups focusing more on profit & bootstrapping approaches rather than Angel funding then?
smcl 11y ago
What part? Is the incorporation of a company complicated\bureacratic? I know here in Czech Rep you pretty much need to have a local Czech speaker setup\registered\licensed with a certain status before you can create a new company. Or is there some capital requirements ("you must have €x,000 in the company accts to operate"), or lawyers fees that make it either tough\impossible for the early "ramen" stage?
- kuschku 11y ago
  In Germany, only very few legal types of incorporation allow the owners to be free of risk. Usually they require a high amount of money to start such a limited (so, in case of bankruptcy, all debt can be paid). There is now a mini-GmbH, essentially a type of Ltd. that can only handle a limited (pun not intended) amount of assets, but does not require you to have enough assets to pay back the debts. Then there are GbR, etc, a lot of nice incorporation types, but these, while effective for a normal company, are not useful for a silicon-valley type of company, as the silicon valley relies on an investment bubble - and a GbR and similar place the liability completely with the owners of the company. Then there are consumer cooperatives and so on, but while these, again, are useful for the normal economy, you can’t use them to make profit by scamming people (as they are effectively profit-less).
  - dublinben 11y ago
    Unsurprisingly, Soundcloud is actually incorporated in the UK. They might be a "German" company, but they seem to not find German business law sufficient or favorable.
    - kuschku 11y ago
      UK means you can save taxes – London is the Bahamas of Europe. Many companies do so. Not necessarily a legal issue.
      - smcl 11y ago
        That is really only true for some Banks if they're registered\based in the City of London (i.e. not where SoundCloud are), but "the Bahamas of Europe" moniker is probably more applicable to Liechtenstein, Switzerland, Jersey\Guernsey or even Ireland.
cronjobber 11y ago
If you want to be a cynic: German law is optimized for protecting the public from investment scams. If you don't want to be a cynic: German law is optimized for protecting the public from investment scams---which makes it hard for startups that aren't investment scams but become victims of false positive identification by german law as possible investment scams.

jdimov9 11y ago

How so?

SyneRyder 11y ago

Berlin seems to be bursting with startup culture, between all the co-working locations & Soundcloud & 6Wunderkinder acquisition. Are the German startups focusing more on profit & bootstrapping approaches rather than Angel funding then?

smcl 11y ago

What part? Is the incorporation of a company complicated\bureacratic? I know here in Czech Rep you pretty much need to have a local Czech speaker setup\registered\licensed with a certain status before you can create a new company. Or is there some capital requirements ("you must have €x,000 in the company accts to operate"), or lawyers fees that make it either tough\impossible for the early "ramen" stage?

kuschku 11y ago
In Germany, only very few legal types of incorporation allow the owners to be free of risk. Usually they require a high amount of money to start such a limited (so, in case of bankruptcy, all debt can be paid). There is now a mini-GmbH, essentially a type of Ltd. that can only handle a limited (pun not intended) amount of assets, but does not require you to have enough assets to pay back the debts. Then there are GbR, etc, a lot of nice incorporation types, but these, while effective for a normal company, are not useful for a silicon-valley type of company, as the silicon valley relies on an investment bubble - and a GbR and similar place the liability completely with the owners of the company. Then there are consumer cooperatives and so on, but while these, again, are useful for the normal economy, you can’t use them to make profit by scamming people (as they are effectively profit-less).
- dublinben 11y ago
  Unsurprisingly, Soundcloud is actually incorporated in the UK. They might be a "German" company, but they seem to not find German business law sufficient or favorable.
  - kuschku 11y ago
    UK means you can save taxes – London is the Bahamas of Europe. Many companies do so. Not necessarily a legal issue.
    - smcl 11y ago
      That is really only true for some Banks if they're registered\based in the City of London (i.e. not where SoundCloud are), but "the Bahamas of Europe" moniker is probably more applicable to Liechtenstein, Switzerland, Jersey\Guernsey or even Ireland.

cronjobber 11y ago

If you want to be a cynic: German law is optimized for protecting the public from investment scams. If you don't want to be a cynic: German law is optimized for protecting the public from investment scams---which makes it hard for startups that aren't investment scams but become victims of false positive identification by german law as possible investment scams.