Our Co-Founder and CFO Dominik reflects on the development of the unique B2B startup ecosystem in Ostwestfalen-Lippe. He takes a look at the past and elaborates which factors for success strengthen the foundation of our network.
An Oasis in the Startup Desert
In 2015, The startup landscape was anything but future-oriented, neither regionally nor nationally. Generally speaking, Europeans showed much less affinity for launching startups than, for example, Chinese or Americans. Germany was even by European standards lagging far behind; outside of the metropolitan areas Berlin or Munich barely anything was happening. Something had to be done to challenge that development head-on and to get a handle on an age in which the innovation cycles of the digital disruption culture were becoming shorter and shorter. We had to mobilize our entrepreneurial talents!
During my research journey in 2015, I personally set out to find out what happens in successful startup ecosystems like New York, Boston, San Francisco, and Tel Aviv. An especially noteworthy experience was seeing a working Incubator in Yeruham in Israel, in the midst of the Negev desert. If such a thing is possible there – why not in the startup desert of Ostwestfalen-Lippe?
So, we launched the Founders Foundation in 2016, in line with the Bertelsmann Stiftung’s claim “Menschen bewegen – Zukunft gestalten” (Moving people, shaping the future). Our goal was to train more entrepreneurially-minded people who want to shape the future and to develop a pilot model for a startup ecoystem in the German hinterland – the place where real GDP value is generated.
The Road to a B2B Startup Ecoystem 4.0
It has been five year since we launched the foundation. When we look back, we can see how remarkably the ecosystem has evolved. There’s, however, a central question that we are still asking ourselves today: How do we update this first version of the startup ecosystem to version 4.0? To continuously find new answers to that question on our mission for ourselves, we have to be aware of two things: We have to find a solution to the chicken/egg-dilemma by actively living a “founders raise founders”-approach, and we have to initiate a grassroots movement that makes an impacting and long-lasting development of the ecosystem possible.
The following steps have proven to be clear factors of success in the past five years:
- Founders raise founders
What sounds like it is easily accomplished, is in truth really difficult since there are barely any startups in the region. We have been embodying that kind of startup culture from the very first moment by putting a successful entrepreneur in the lead position: my co-founder Sebastian. Our motto was “Make things not slides!” – together we launched the first startup events and went from door to door. Our very first event even happened before the official launch – in January, in the courtyard of one of Bielefeld’s premier bars, at 2° degrees celsius, with roasted suckling pig and hot plum brandy. We were roughly 25 people, basically everyone who had ever used the word “startup” in Bielefeld.
More events followed – the Founder’s Monday at the Fachhochschule des Mittelstands (Technical University for the German Mittelstand) and the first Founders Startup School (back then still called Founders Academy) with Dr. Jan Brinckmann of the ESADE Barcelona. 4o participants partitioned into roughly 10 teams. This was the basis for the Founders Foundation Education Model, an approach that combines theory with practical startup knowhow. Founders teach founders how to launch a startup. The curiosity about our formats is steadily growing.
From the Startup School, via Lab and Accelerator and the Executive Masterclasses – our Founders Foundation Education Models is getting more and more specific in how it imparts knowledge to founder teams on their individual journeys. This has become an approach for training founders and consequently the core of a small startup scene.
Teams like Semalytix, Valuedesk, Zahnarzt-Helden, Prodaso, Margin und Co. have learned how to make use of the advantages of the local startup scene and relationships that are built on trust. The nucleus of the founder culture keeps growing each year. At the moment, we count 119 startups within the ecoystem.
The numbers as statistics are, however, less important than the fact that the numbers are showing that an entrepreneurial culture is evolving. The pure amount of startup launches generates relevance with promotion bodies for economic development, universities, tradtional companies, or the media. In turn, these entitites start looking into our kind of entrepeneurship wich also serves to make this alternative career-path more wider-known and more transparent.
- Thinking ecoystems means thinking networks
Startup knowledge and startup experience are important factors for success in ecoystems. Especially in the beginning, the support from founders and experts from other ecosystems is crucial. During that stage, startup founders are ultimately looking for water in the desert when they are looking for investors, co-workers, and their first customers. These stations are essential for survival – and a long-lasting ecosystem must be able to provide them.
Countless founders and experts from Berlin, Munich, Tel Aviv etc. have contributed with their knowledge and experience to the growth of the B2B startup ecosystem in Ostwestfalen-Lippe; and helped that the startups are evolving in the right direction.
The startup ecosystems works because founders from various stages of the startup lifecycle are working together, maintain close communication with their investors, because technical universities are able to transform technology and science into product and sales, and because there is a direct access to the market.
- Grass doesn’t grow faster when you pull it
Creating an impactful ecosystem means working from the buttom up. Successful startup creation takes time and does not explode overnight. When startups grow, the startup environment grows as well: more business angels, more venture capital, more deals, more startup-versed legal and tax professionals, more B2B customers and ultimately more expertise for new business models. All of that takes time.
Nachhaltigkeit heißt Bottom-up Arbeit. Erfolgreiche Startup Gründungen dauern und explodieren nicht einfach aus dem Nichts. Mit den wachsenden Startups wächst das Umfeld.
The truism Money makes the world go round is probably more apt for the capitalist and investment-driven startup segment than ever before. For creating startup ecosystems, the idea is, however, overrated, at least for the starting phase. Millions of euros – preferably state-sponsored – are being invested into ecoystems for the construction of buildings or for re-branding existing positions that are publically re-financed that way. In an instant, research associates at technical universities suddenly become startup coaches. No one asks how efficient the spending of the allocated funds really is. Consequently. medium-term effects tend to evaporate. The Founders Foundations also is well-funded but we focused on efficient spending und stayed far below the predicted costs, especially during the starting phase. By funding the Founders Foundation, the Bertelsmann Stiftung is choosing another way.
Within a period of ten years the pilot model Founders Foundation undergoes an iterative development. Every year, we adapt our model for training founders to the current situation; we evaluate the systematic measurement of startup density, our performance and the funding, and we strengthen market access and the development of startup knowledge.
- Be brutally honest with your benchmarking
What you can’t measure, you can’t control. This applies both to us and our startups. This brutally honest formula also applies to the whole of the B2B startup ecosystem. There is still a long way to go if we compare ourselves to similary-sized cities such as Tel Aviv. The Hinterland of Things is still young and is still grow up. Nevertheless, comparing yourself to the pioneers of the industry helps to maintain focus. Digital business models work globally, and despite all economic activities Germany and Europe are still lagging behind.
Part of the truth is also that deep-tech companies and unicorns are still being made in Munich and Berlin. The Flaschenpost takeover by Dr. Oetker shows us what’s possible in our region. Mobilizing entrepreneurial talents is still the key factor to capitalize on the next whitespots. which we will find by monitoring results and using benchmark analysis. Ostwestfalen-Lippe is one of the strongest economic regions in Germany, Northrhine-Westfalia even one of the strongest in all of Europe. According to Startup Monitor, Northrhine-Westfalia has become the no. 1 of startup-launching regions. Within the region, the distribution of startup locations has shifted towards the non-metropolitan areas.
- Focussing on B2B in the heart of the German Mittelstand
Being focussed always helps, but if you’re building an impactful and long-lasting startup ecosystem in this region, the focus should be on B2B – everything else has either already been done in Berlin or has been missed out on. At least that’s the general consensus. Positioning the ecosystem is still important. Capital cities like Berlin, London, Paris, or Lissabon have access to talented people alone by virtue of their location. Bielefeld and Ostwestfalen-Lippe? Most people associate these with backwater, provinciality, hinterland. But this Hinterland of Things is the heart of B2B. Bielefeld is the capital of the German Mittelstand. The strengths of the region lie in the diversity of family-run Mittelstand companies and the mix of different sectors. Exactly these different sectors must deal with current technological innovations in the areas cloud infrastructure, vertical market software as service solution, B2B marketplaces and platforms, big data analysis, crypto-infrastructure and blockchain, logistics and mobility, climate change etc. To put it bluntly, the Hinterland of Things is a representative lab experiment on how to scale business models in all of these aforementioned areas while focussing on industrial companies.
Fokus hilft immer und wenn es um den Aufbau eines nachhaltigen Startup Ökosystems hier in der Region geht, sollte der Fokus ganz klar auf dem Bereich B2B liegen, denn alles andere wurde verschlafen oder bereits aus Berlin heraus gegründet – soweit die gängige Meinung. Die Positionierung des Ökosystems ist trotzdem wichtig. Die Hauptstädte wie Berlin, London, Paris oder Lissabon gewinnen allein durch den Standort Talente. Bielefeld und Ostwestfalen-Lippe hingegen erzeugen bei vielen erstmal die Assoziation mit Provinz, Pampa und Hinterland. Eben dieses Hinterland of Things steht allerdings für B2B. Bielefeld ist die Hauptstadt des Mittelstands. Die Besonderheit der Region liegt in der Vielfalt der familiengeführten mittelständischen Unternehmen und dem Branchenmix. Eben diese unterschiedlichen Branchen müssen sich alle mit den aktuellen Innovationen in Bereichen wie Cloud-Infrastruktur und vertikalen Software as a Service Lösungen, B2B Marktplätzen und Plattformen, Big Data Analysen, Cryptoinfrastruktur und Blockchain, Logistik und Mobilität, Klimawandel etc. auseinandersetzen. Spitz formuliert ist das Hinterland of Things das repräsentative Labor für die Skalierung von Geschäftsmodellen in den genannten Technologiefeldern mit Fokus auf Industrieunternehmen.
Our Founders Foundation alumni startup Valuedesk, for example, digitalizes core processes in procurement departments which helps them optimize costs.
Their first customers came from very different industrial sectors, from mechanical engineering to food or consumer goods. All of them could be practically reached by bike. This experience laid a solid foundation for the national and international scaling of the startup.
According to our own ideal, we are neither a silicon something nor a valley something. The Hinterland is a living B2B startup ecosystem and a “representative lab“ that combines entrepreneurial talents, family-run global leader companies, and capital – it’s a future-oriented playing field. The connection of Hinterland with provinciality and “the boondocks” is not real. That justs exists in the minds of people, because the digital world knows no physical boundaries. It is global and also works in remote regions like our Hinterland of Things.
About the Author
Acting from a deep understanding of the relevance of entrepreneurial competence as the driving force for digital transformation, Dominik developed the Founders Foundation together with his co-founder Sebastian and the Bertelsmann Stiftung. Since, he has been leading the company as CFO with heart and vision.
As an architect for the systematic training of tech entrepreneurs, Dominik shapes the next generation of successful founders and creates a blueprint for the development of a strong B2B startup ecosystem here in Bielefeld.
You want more?
Watch our anniversary video about the past five years of the Founders Foundation.