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Germany is increasingly becoming the country of green founders. There are now around 6,000 startups in Germany that are classified as green because of their very specific contributions to environmental and climate protection. Reason enough to take a closer look. We will provide an overview of the green startup scene in Germany and introduce some particularly interesting young companies in more detail.
Every year, the Berlin-based Borderstep Institute for Innovation and Sustainability publishes the Green Startup Monitor, which summarizes the latest developments in the field of green startups. In addition, the current ministers from the Federal Ministry for Environment, Nature, Conservation and Nuclear Safety and the Federal Ministry of Economic Affairs and Energy write articles for the foreword every year.
The topic therefore also carries political weight. No wonder, given that green economy was the central topic of the 2012 United Nations Conference on Sustainable Development in Rio. Following this, the German government developed its Green Economy Agenda, which it intends to use to support the German economy in becoming more of a green economy. A central point is supporting research in this area.
What is important here is the definition of a green startup.
A green startup is a company that is less than ten years old, is very innovative and/or has a planned growth in employees or turnover, and contributes to the ecological goals of a green economy with its products or services.
In principle, it can be said that green startups are distributed more or less evenly across all economic sectors. The dominating sector is the IT industry, which accounts for 17 percent of all green startups in Germany, followed by food products (10 percent), consumer goods (9 percent), agriculture (7 percent) and energy (7 percent). It is interesting to note that, according to the Borderstep study, the insurance industry has so far had no green startups.
Perhaps Circunomics will manage to do the best thing a company can ever achieve: creating a completely new market. In the case of the startup from Mainz, this involves the recycling and trading of used lithium-ion batteries, only 5 percent of which are currently recycled worldwide. By using big data and artificial intelligence, Patrick Peter – the founder of Circunomics – intends to establish the first open platform for recycling, remarketing and certifying battery components and recycling materials, thus creating a new market worth €8 billion.
Peter is driven by a clear dream: “Our vision is zero waste, made possible by data.”
The basis for Circunomics‘ success will be its own battery database, in which an enormous amount of data ranging from supply chain information, lifecycle management data to telematics data collected in real time from practically all lithium-ion batteries worldwide can be stored, processed and made available. Companies can then purchase or sell used batteries or individual components via the Circunomics trading platform, which is also connected to the database. A connection to the London Metal Exchange is even planned, where rare minerals from batteries – such as cobalt – can be traded.
The Circunomics project even impresses established IT and data giants. At the Circular Economy 2030 competition by Google and SAP at the World Economic Forum in Davos, Circunomics won a place in the final and is thus one of the most respected startups worldwide in the field of the circular economy.
North Rhine-Westphalia (NRW) has the most green startups. After all, 20 percent of all green startups in Germany are based here, especially in the Rhine-Ruhr metropolitan region. Berlin ranks directly below NRW with 15 percent. Baden-Württemberg is next (13 percent), followed by Bavaria and Lower Saxony with 10 percent each.
It gets even more exciting if you look at the regions in which the percentage of green startups is highest instead of the absolute figures. Then suddenly it is the north and east of Germany that are dominating. This ranking is led by Schleswig-Holstein with 32 percent, followed by Mecklenburg-Western Pomerania (31 percent) and Saxony (30 percent).
Here we have created a topographic map of Germany. However, our map does not show altitude, but rather the number of green startups in the respective regions.
Consumers around the world are becoming increasingly aware that products do not just come from one factory, but have an entire supply and value chain behind them. The more this awareness grows, the more consumers demand transparency in the supply chain. They want to be sure that their products meet all aspects of sustainability throughout the supply chain. A new smartphone isn’t so fun anymore if ecosystems are ruined for the rare earths contained in the chips and if people are massively exploited for its production.
This poses great challenges for companies, because in a globalized economy, supply chains are highly complex entities consisting of suppliers in different regions of the world with different administrative structures and with endless sub-suppliers and sub-sub-suppliers. For quite a few companies, this is a task that can hardly be accomplished with the usual methods.
This is exactly what the Cologne-based green startup Sustainabill, founded in 2017 by the Wuppertal Institute for Climate, Environment and Energy, wants to change: “More and more companies want to make management decisions on the basis of sustainability criteria, but do not have the right data. This is exactly what we’re changing,” says Klaus Wiesen, CEO and co-founder of Sustainabill, summing up what his startup is doing.
For this purpose, they have developed an online platform that companies can use to visualize their supply chains down to the smallest detail with much less effort, and that also allows sustainability aspects to be tracked and monitored. The basis for this is Sustainabill’s continually growing database with corresponding sustainability information about suppliers all over the world, such as certifications, raw material data, production data of individual products and presuppliers. This data comes from companies or the suppliers themselves, or is researched and entered by Sustainabill. Sustainabill validates self-disclosure with external data such as satellite information or through automatic plausibility checks.
Thanks to the extensive database, companies can then use Sustainabill to keep track of the latest information on the economic, environmental and social sustainability aspects of their supply chain.
Just how important the subject of sustainable supply chains has become can be seen from the impressive list of customers, parts of which read like a who’s who of the German economy. Volkswagen, Audi, Metro and Zalando use Sustainabill to make the sustainability of their supply chains transparent and to make sustainable management decisions based on the data obtained.
Wiesen thinks this is exactly the right thing. “Digitalization will ensure that dirty companies will no longer be able to hide in future. Companies that clear forests or pollute rivers can quickly be tracked down using satellite data. If it is known which suppliers are involved in the supply chains, big brands will take more responsibility for their suppliers to ensure that grievances are rectified.”
First of all, green startups are companies like any other. This means that they need capital. And this is precisely where green startups in Germany face higher hurdles than young companies in non-green areas.
A survey by the Borderstep Institute revealed that, in addition to government funding, family and friends are the most important sources of funding for green startups. Almost one third of German green start-ups are therefore powered by the “Bank of Mom and Dad.” Especially in economically uncertain times with the threat of unemployment, such as the current COVID-19 crisis, this means a threat to the innovative power of the green economy that should not be underestimated.
Larger investors in particular are conspicuous by their absence from green startups. While 25 percent of conventional startups can finance themselves with business angels, only 17 percent of green startups currently manage to do so. The discrepancy in venture capital is even more glaring. No less than 17 percent of conventional startups receive capital from venture capitalists, but only 9 percent of green ones.
Crowdfunding – a ray of hope No less than 9 percent of green startups are able to successfully supply themselves with capital in this way. Just 4 percent of conventional startups follow this path, but this may also be because they are more successful with other sources of capital. This is shown by the figures of the Green Startup Monitor 2020.
Starting up a business in Germany is still mainly done by men. The same applies to green startups, although the situation here is slightly better than for conventional startups.
As many as 22 percent of green startups were founded by women in 2019. By comparison, the share of female founders in conventional startups was just 13 percent in the same period. So we are still far from gender equality in both areas.
Above all, changing this will be a matter for the state. It must promote women founders more strongly to achieve a fairer distribution. However, venture capitalists should also step up their efforts to invest in companies founded by women.
The world has a problem: plastic. Every year, billions upon billions of disposable plastic products are briefly used and then thrown away. They then lie on rubbish dumps where they do not rot, or they turn into even more harmful microplastics in rivers and seas. To change this, the EU has decided to ban a variety of disposable plastic products from 2021 onwards.
For the three founders of Stuttgart startup Spoontainable, Amelie Vermeer, Julia Piechotta and Anja Wildermuth, 2021 could therefore be the year of the final breakthrough.
The founders, who met during their studies at the University of Hohenheim, developed an edible ice cream spoon made from cocoa fibers. These fibers are a waste product from the food industry that has been thrown away unused until now.
Edible ice cream spoons made of plastic – on first hearing it sounds very small, very niche. However, this changes quickly when considering the absolute figures. 360 million plastic ice cream spoons are used in Germany every year, most of which are thrown away after use. A sustainable alternative made from edible fibers can thus really make a significant difference here, especially if they are used and then eaten. And if they are not eaten, then at least they become food waste instead of plastic waste.
This is why the “Spoonies” are available in two flavors so far: chocolate and oatmeal cookies. In both variants, the founders paid particular attention to the durability (a spoon will last for about 60 minutes in ice cream) and the taste.
And it isn’t just the founders who are convinced that the Spoontainable can be a great success. At the Start-up BW Elevator Pitch 2019 held by the state of Baden-Württemberg, Spoontainable beat thirteen other regional winning teams in the final. The next success came at the end of 2019 when Spoontainable prevailed over 80 other startups in an Aldi start-up pitch. It is now being supported by the TechFounders Accelerator Program to turn the idea of edible ice cream spoons into reality for Aldi.
Our excursion into the green startup scene shows that there is a lot of sustainable innovative spirit in Germany. And that gives us good reason to hope for a sustainable future worth living. For Germany. And for the world.
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Germany is increasingly developing into the country of green founders. We get an overview of the green start-up scene in Germany.