4 out of 10 startups in Germany classify themselves as part of the Green Economy. This is the result of the Green Startup Monitor 2020 published on 29 April 2020 by Borderstep Institute, an independent research institute focused on entrepreneurial solutions for global challenges, alongside German Startups Association.
The report is the most detailed yearly survey of Germany’s green startup scene, demonstrating the importance of green startups in the German startup scene and as major drivers of innovation towards a Green Economy. It also recommends measures to improve the conditions and market environment for green startups in Germany.
But what exactly are the challenges and needs of green startups?
The state of green startups in 2020
- 21% of German startups can be classified as ‘green’ since their products and services make a contribution to environmental and climate protection
- Expectations for the business situation among green startups are better than non-green ones and much better than in the established industry
- Green startups are just as growth- and profit-oriented as non-green startups, but they additionally create social and ecological impact
- At 22%, green startups have a significantly higher rate of female founders as non-green startups (13%)
- Raising capital from business angels or a VC is a much greater challenge for green startups, especially for very innovative green startups
Challenges of green startups and how to tackle them
When asked what obstacles and barriers are in the way on their road to success, green startups are stating it’s harder for them to get access to venture capital while also being confronted with lots of bureaucracy when applying for public support programs. Here is what could be done in order to improve overall conditions for green startups:
- New sources of capital and tailored financing options. While Germany offers a wide range of public support programs for startups, especially in the seed phase, a new and independent funding line for green startups is needed. A governmental sustainability innovation fund for green startups would allow investing in green startups as an independent asset class.
- Establishing a nationwide network of regional sustainability hubs. Green startups need the chance to better engage with established companies in order to have better access to customers, markets and technology expertise. A hub concept is a basis of a reliable network between green startups, SMEs as well as scientific institutions.
- Sustainability as a success factor in public startup support programs. A stronger consideration of startups with an impact on environmental protection and sustainability in public support programs would make it more attractive for founders to consider sustainability aspects of their business models as success factors for their entrepreneurial future.
- Lower bureaucratic hurdles in public support programs. Applying for a public support program still comes with a ton of paperwork, a (what feels like) weekly changing contact person and usually lasts several weeks until the start. Therefore, “one-stop-shops” for entrepreneurs with a single point of contact and low-threshold access is needed.
- Creation of purchasing groups for innovative green products. The state and local municipalities should increasingly act as pilot customers of innovative green products and services. They would therefore help green startups overcome the “Valley of Death” of market introduction.
Green startups in the High-Tech SeedLab
The High-Tech SeedLab is proud to focus on supporting teams with ideas that contribute to the creation of a more connected and greener society and the promotion of women in tech. Green startups are part not only of our current batch 2020 but were also represented in our previous accelerator rounds (back then called ‘AtomLeap High-Tech Accelerator’).
Cosmetics without single-use plastics
Consumer goods generate 16 million tons of single-use plastics every year in Europe alone. 60% of those plastics get incinerated or end up in landfills. Zero Waste Era, participant of High-Tech SeedLab’s current 2020 batch, aims to eliminate the plastic waste of cosmetics and household items through a brand of sustainable cosmetics without single-use plastics. The all-natural products are delivered in smart, refillable, zero waste containers made out of ocean plastic. Due to the outbreak of COVID-19, the startup pivoted its initial plan and launched hand sanitizers and started distributing them on a specially built cargo bike.
Converting old clothes into a sustainable material
Kleiderly, part of our batch in 2019, addresses two environmental problems with one solution. Namely, the waste of the plastic and fast fashion industries. The first problem is that for every kilogram of plastic, 6 kg of CO2 is produced. The second problem is that a whopping 87% of all materials used for clothing end up in landfills or are incinerated, generating in the process as much CO2 emissions every year as six billion return flights from Berlin to Australia. To fix this, Kleiderly has invented a way to take waste clothing (like t-shirts and jeans) and turn them into a bioplastic (less polluting than traditional oil-based plastics), which can be moulded into different products like suitcases or headphones. This way, all the wasted garments could be transformed into different products for a second life.
Do you also have an idea to help our society become more sustainable?
Get inspired by our startups or found one yourself! We will open up applications in October for our 2021 batch. Have a look at our website to learn more about our program requirements and contact us if you have any questions:
This program is financed by the European Social Fund (ESF), as well as the State of Berlin.