AI desert despite economic growth?

It is not only corporate culture that often stands in the way of start-ups in Germany, a country characterized by traditional family businesses.

Despite the economic growth in Germany and Europe, start-ups dealing with artificial intelligence hardly have a chance of catching up with the lead that prevails in this field in the USA and China. In his Bachelor's thesis "Systematic Analysis of the German AI Startup Ecosystem," our graduate Adrian Görgen dealt with precisely these challenges for an entrepreneurial ecosystem in Germany.

Nevertheless, there is an AI start-up scene in Germany. It is concentrated in the cities of Berlin, Munich, Hamburg and the regions Cologne-Düsseldorf as well as Karlsruhe-Stuttgart. The automotive industry and the health and financial sectors benefit most from the 278 German AI start-ups. Among the AI-supported applications, marketing tools and chatbots, but also intelligent robots, are most frequently represented. 

In his work, Görgen analyzed the political, cultural and economic framework of the AI start-up scene. Looking at global AI development, the USA and China are far ahead of Germany, which is not only lagging in digitization. Germany also lacks an extensive network of companies, investors, and researchers, as well as a large amount of data. But the labor market and the willingness to invest in AI start-ups are also more attractive and larger in the USA, which is why many experts and specialists are turning their backs on Germany and seeking their success overseas. 

From his analysis, Görgen concludes that Germany cannot achieve a holistic improvement simply because of its limited resources of data, financing, software, and hardware. What is needed is a European approach that safeguards competitiveness by promoting the European (data) Single Market. According to Görgen, the market potential in Germany, in particular, lies in the digitalization of SMEs and the establishment of initiatives that bring companies into contact with AI. To catch up, bureaucratic hurdles would have to be reduced, the incomplete financing landscape improved and the risk aversion to entrepreneurial activity anchored in German culture reduced. 

The title of the bachelor thesis is "Systematic Analysis of the German AI Startup Ecosystem." It was supervised by Professor Dr. Dries Faems, Chair of Entrepreneurship, Innovation and Technological Transformation.