With all the talk about German startups revolving around Berlin, a few cities across the country might be throwing up their arms and wondering why no attention is coming their way. While Berlin is likely to remain the current go-to continental destination for European founders to scale their businesses, the northern city of Hamburg is now offering a similar rate of growth according to a new report by Hamburg Startup Monitor.
The survey asked 214 founders about the local climate, while also taking stock of the performance of 450 companies between August and September 2015.
A third of those companies were less than a year old while a quarter were no older than two. The numbers suggest a steady rate of new companies year over year as 17% of the remaining companies were between two and three years old and 9% more no older than four.
“The entrepreneurial climate in Hamburg has gotten better since 2014,” said Hamburg Startup Monitor’s project manager Sina Gritzuhn, according to Hamburg News when presenting the results last week in Germany. She went on to describe the ecosystem’s immaturity due to the large component of young companies in the city, but said “optimism” was abundant. “Many initiatives and startup programs have been set up.”
Hamburg vs. Berlin; Hamburg vs. Silicon Valley
The numbers that might indicate where the city is moving are in the demographics. The average age of founders is 34.5 according to the report. That contrasts interestingly with ages in Silicon Valley and Berlin outlined in Compass’s 2015 Global Startup Ecosystem Report. Silicon Valley founders were 36.2 years old on average, while Berlin’s were younger at 31.8.
Only 15% of Hamburg’s founders were women, far lower than Silicon Valley where it stands at 24% but far higher than Berlin at 9%. It’s worth noting that Compass says the European average is about 17%, putting Hamburg in Google territory.
About 15% of Hamburg ventures were founded by a mix of men and women, while 10.75% were founded only by women. Fourteen companies had a single founder who was female, leaving around 30 companies – roughly 7% – with founding founding teams solely made up of women. The remaining 75% are all male founded operations.
Importantly, the percentage of companies who have received funding generally retains that 15-10-75 ratio throughout the series of rounds.
Most of the companies surveyed were past the seed stage and looking for Series A, a trend common across the verticals outlined in the study.
Out of the 214 that responded to the researchers, 85 were B2B startups, 73 in B2C, and 28 could be called a mix. Several businesses were labeled business-to-developer, business-to-employee and customer-to-customer, though no B2G.
“Since startups are often the bridge between established industries and often bring together the products or services of our local startup ecosystem, we decided to make a general categorisation of the [different] verticals into which each startup was [then] classified,” Gritzuhn went on to say.
While e-Commerce companies employed the most people collectively among several companies (25.7% of Hamburg startups), FinTech dominated in terms of employment with 330 employees spread amongst the few companies (4.67% of Hamburg startups) included in the study. Seventeen percent of companies are in media, 14% in “tech”, 14% in “services” and the remainder split among gaming, foodtech, fashion, and other verticals.
Getting geld is the big challenge, but Hamburg has solid marks
Only 167 companies were willing to disclose exact amounts of funding to the survey team. Among those that did, 14 said they had scored between EUR 50,000 and 100,000 on the first financing round. A fair number of first rounds came from venture capitalists (16) rather than angels (22).
No one would be surprised to see most Hamburgers can’t find the right amount of sauce for their meals. Getting capital is the most common problem companies face across sectors, but the very clean graph also reveals insights about founders by industry.
About half the companies surveyed plan funding rounds in the next 12 months, with 63 of them hunting for a Series A. Two dozen companies are hunting for their seed money, while another 24 are hunting for Series B and beyond.
Overall, Hamburg is being underestimated as a tour de force. It sees some of the same hobbles that are experienced in other nascent startup scenes, but its proximity to Berlin and the noticeable increase of new companies indicate that the city is well on its way to compete with Munich as Germany’s #2 startup city.
View the full report on Infogr.am.