Germany’s Ruhr region may have come late to the game, but it’s an undisputed hub for B2B startups

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The Ruhr region in Germany is a collection of over ten cities in the state of North-Rhine Westphalen, and includes four major cities, namely Essen, Duisburg, Dortmund and Bochum. This region used to be the coal mining powerhouse of Germany till the first half of the 20th century. As a result, it still is Germany’s largest and most dense urban area with close to 5 million residents. 

Traditionally, the Ruhr region has also been an industrial titan apart from its coal-based economy. Names such as Tengelmann Ventures, E.ON, Thyssen Krup, Aldi, and RWE hail from the Ruhr region. Even as a majority of the coal mines are now relics in the Ruhr region’s history and nature has taken over the pits that were abandoned, the Ruhr’s industrial base is fast becoming an enterprise startup hub.

Oliver Weimann is the CEO of the RuhrHub, which organises the Ruhr Summit, an annual startup event in the region. According to Weimann, the startup ecosystem in the Ruhr region has been growing since 2015. It boasts of around 20 Universities with close to 300,000 students in all. Since the last five years, a startup mindset seems to have developed among the students. 

“The idea behind the Ruhr Summit was to showcase the startup ecosystem in the Ruhr area as well as to get established speakers from around Europe to interact with the ecosystem players here,” Weimann told Silicon Canals

When one talks about startup hubs in Germany, cities such as Berlin and Hamburg come to mind. Unlike the automobile powerhouses in the south of Germany – states of Bavaria and Baden-Württemberg, these two northern cities lacked strong industrial legacy. As a result, they have matured as startup hubs. 

“They now have angel investors in the form of startup founders from a decade ago. That is lacking in the Ruhr region. Even though the Ruhr region is still an industrial hub and has rich individuals, their risk appetite for investing in startups is still to show some traction,” said Weimann.

Ersin Üstün, Project Manager at Gründerallianz Ruhr feels the Ruhr region lacks experienced mentors and role models in the startup space as compared to Berlin. Gründerallianz Ruhr brings together startups, corporates and industries. 

According to the Gruenderallianz Hub, the Ruhr region has 443 Verified Startups, 15 Venture Capital investors, 5,759 employees and 131 Corporates at the time of writing.

“The number and quality of startups from the Ruhr region has improved since 2015. Initiatives such as Business Metropole Ruhr, Greunderallianz, among others have significantly improved the quality of early stage startups in terms of investor readiness, business modelling and getting the technology ready for pivoting. What is lacking here is an active angel investor network through formerly successful founders,” said Weimann. 

He notes that this cannot be hurried and will take its time as places like Berlin have had a 10 year headstart over the Ruhr region in that aspect.

Ruhr region’s industrial hangover is a stumbling block…

Unlike Berlin, which didn’t have huge industrial powerhouses to begin with, the Ruhr region boasts of names such as Siemens, Thyssen Krupp, Aldi, RWE, Vonovia, and Evonic, among others. Not to forget, its standing as a coal powerhouse in Germany before the Energiewende or transition to clean energy began. Traditionally, University graduates in the region have had a variety of industries to choose from.

On being asked if that could be a reason why startups never got a headstart in the region,

Üstün feels that it has influenced the timing of the startup ecosystem to some extent. According to him there have been enough industries for students to choose from and many have charted excellent career paths.  

“All the Universities in the region have tie ups with the industry and have role models on that front. Universities have a mindset that they have to ensure candidates are recruited in the big industries, a lot of who also fund research at these universities. So there is an unsaid expectation from the Universities to provide the talent,” said Üstün. 

Frank Speer, Hub Manager Internationalisation at Business Metropole Ruhr was on the fence. 

 “I don’t want to focus on why we came to the startup scene later than other German cities. I would focus on now and the future. We are coming late, but there is something huge coming. These big corporations are under pressure to digitise their business models. As a result, they have opened up their R&D activities to incorporate external startups and experts,” noted Speer. 

…but also an advantage for B2B startups

Weimann concurred with Speer on this aspect stating that the presence of traditional industries in the region was an asset for B2B tech startups.

“If you are a B2B tech startup, you will find partners for piloting and testing your solutions out. You can create proof-of-concepts easily. There are big names such as Siemens, ThyssenKrupp, E.ON and there is a lot of open mindedness among SMEs,” said Weimann.  

This is seen in the kinds of branches and technologies that are popular in the Ruhr region. For instance, the Ruhr Universitaet in Bochum and Institute of Internet Security in Gelsenkirchen ensures there is a lot of talent in cybersecurity-related startups. Duisburg boasts of the world’s largest inland port and is counted among Europe’s largest transport and logistics hubs. The Startport Accelerator in Duisburg helps logistics startups connect with logistics companies and try out their solutions in a real world environment.

“There are technologies related to data analytics and robotics as well. This ties in with the Smart Industry or Smart Production which is strong in the Dortmund region. We do have an active Blockchain ecosystem where we are focussed on industry-focussed blockchain use cases. The health ecosystem is pretty strong as we have a lot of hospitals taking care of the 5 million odd population of the region. This is in addition to the two universities in the medicine sector and the presence of health data providers, invoicing companies, health robotics, among others. Honestly, in the B2B sector, there are immense opportunities,” noted Weimann. 

Üstün notes that there are indeed more B2B than B2C startups in the Ruhr region and it comes with its pros and cons. 

“The major disadvantage is in terms of scaling. When you have a B2B model, there is a lot more bureaucracy that a startup has to deal with, it takes quite long for sales as it has to go through professional purchasing departments. With the B2C models scaling is relatively quicker and making sales is also easier. The advantage with B2B startups here is the market options. Thanks to the industrial heritage, there are many clients for B2B startups. There is a huge potential for growth – which is slow at first, but there will be a point when there will be a hockey-stick curve of growth,” said Üstün.

The opportunities are not just limited to local startups. Speer, who is also at the forefront of connecting international startup hubs to the Ruhr region, told Silicon Canals that even international startups can connect with local Ruhr industries and try out their proof of concepts. According to Speer, the other advantage is the possibility for foreign direct investments in Germany.

“We are looking at where there is a high density of tech expertise. The first innovation we launched was with Tel Aviv. Israel has good startups but they need to scale up abroad – so they were interested in cooperating with our companies. We have a close relationship with the Chinese ecosystem in Shenzhen, because of the Duisburg connection on the New Silk Road. This year we are also launching a collaboration with Toronto, Canada. There are synergies in AI, healthcare, robotics which are complementary to our industry,” noted Speer.  

More collaboration between its big cities

The four biggest cities in the Ruhr region include Bochum, Dortmund, Duisburg and Essen. Unlike other hubs of Germany which are concentrated around one major city, the Ruhr region needs to have a more flexible attitude when it comes to startups according to Weimann.

“In Munich, you have one metropolis and it is the star of Bavaria. We have Essen, Dortmund, Bochum, Duisburg. These are proud cities as they have a long history in industrial greatness. There is no clear hierarchy and they need to co-operate consequently. As a founder from Essen, you need to be willing to go to Dortmund to find talent there,” said Weimann, stating that the Ruhr region as a whole has to come together, not as individual cities.

Changing mindsets

Local universities have also incorporated a more agile mindset when it comes to giving opportunities to new ideas. Bochum, Duisburg as well as Dortmund Universities have launched many entrepreneurship programmes that are funded by the government.

“We have institutions in the Universities which are focussing on students and professionals who are willing to startup. If you are playing around with your business idea, you will find the right person who can help you out with stipendiums and other programs, helping you connect with existing startups and companies. They help you till the founding stage. Then partners like the Ruhr Hub and others take over for the next step. The good thing is that pre-founding is happening at universities,” noted Weimann.

VC Ecosystem in the Ruhr region

The venture capital ecosystem in the Ruhr region is definitely not as advanced as the ones in Berlin or Hamburg. 

“There are VCs in the Ruhr area – but you won’t find them in a club. For instance, many VC teams of big companies based here are located in Berlin. We don’t have a VC scene as such in the Ruhr region,” said Speer. 

Üstün notes that a lot of the VCs who are based in the Ruhr region, invest in mature hubs such as Berlin. “Most of the startups here get only pre-seed or seeding rounds. To give an idea of scale, the funding rounds for startups in the Ruhr region for a year could be matched by a month’s worth of rounds in Berlin. B2B startups take a long time to scale and that could be a reason why VC infusion isn’t comparable to other mature ecosystems,” said Üstün.

According to Grunderallianz, there are 19 VC investors in the Ruhr region with Innogy Ventures participating in the highest number of rounds (42) with deals totalling €349 million. 

To compensate for the lack of this, Speer spoke about initiatives such as the Matchmaker Ruhr project, which is a platform for startups to match with the right businesses or VCs. 

“You can think of it as Tinder for startups. You upload a profile and what you are looking for, and the Matchmaker platform will connect you with the right business matches. We went live last year and the whole ecosystem did it together. We have close to 3,000 registrations so far,” said Speer.

Greunderallianz has two initiatives. One is the Ruhr Circle which brings together enablers and multipliers in a startup ecosystem. The other initiative is Corporate Innovator Circle where close to 20 corporate heads come together to exchange ideas and issues that can get more startups onboarded.  

Weimann believes that business angels in the Ruhr region are mostly managers who do not have the same risk spectrum as formerly successful founders. “As for early stage funding, we are equipped with public funds such as the fund for the Ruhr area itself,” said Weimann. 

Despite the roadblocks, all the interviewees were positive about the fact that the Ruhr region is one hub to watch out for. “The growth will be slow, but some years down the line, it will see massive traction. This will then attract more investors and by then, even lead to founder-investors,” said Üstün.

Ruhr region startups to look out for

  • TrustCerts: They make digital originals tamper-proof and are already in co-operation with the Bundesdruckerei, Telekom, BMWI and Co. 
  • VMray: This is a cybersecurity startup which provides X-Ray Vision for malware – a smart and stealthy threat analysis and detection platform. It has already received €24.4 million funding and is active in Europe and the US.  
  • Pottsalat: An environmentally friendly food delivery platform focussing on salads and bows. It has around €2 million in funding and is starting a nationwide franchise.
  • Wirfliegendrohne.de: Property management for professionals by digitization of buildings and assets. It is already working for dozens of cities and biggest property companies

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Nimish Sawant

Nimish Sawant is a Berlin-based independent technology journalist with over 10 years of experience covering consumer/enterprise technology, startups and everything that intersects with technology. When not engrossed in technology news, Nimish loves immersing himself in books, listening to podcasts and taking long bike rides.

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