April 4, 2024

‘We can’t find a single German or European applicant’: Deeptech startups feel bite of talent shortage

Intel's expansion in Eastern Germany could worsen talent bottlenecks

When Münster-based startup Pixel Photonics wants to add to its 35-person team, it has to advertise roles far beyond Germany — and hire from countries such as Turkey, India and Iran.

The startup is building single photon detectors that detect the tiniest particles of light for use in quantum computing and communications, microscopy and health diagnostics. Its technology, for which it’s raised €1.45m in venture capital and secured several EU and German grants, could be used one day to detect cancer cells in patients.

But the one problem it keeps hitting its head against is finding qualified people. Cleanroom technicians and engineers, who are responsible for manufacturing the company’s chips in a controlled environment, are particularly hard to hire for, as well as financial accountants and IT system administrators.


“For some positions we can’t find a single German or European applicant,” says Christoph Seidenstücker, Pixel Photonics’ cofounder and CFO. 

The founding team of Pixel Photonics: Dr. Wladick Hartmann,<br/>Christoph Seidenstücker, Fabian Beutel, Nicolai Walter and<br/>Martin Wolff (from left). © Peter Leßmann, Münster, 2022."

Hiring outside of the EU, however, is difficult for German companies. Securing visas, signing employment contracts (which until recently, had to be signed in wet ink) and the long wait for tax numbers are all burdensome processes that slow companies down and stall growth, say founders. 

But if Germany is to achieve its aim of becoming a "republic of startups", it’ll need to address recruitment challenges felt by startups working in crucial areas: from chipmaking to quantum.

In-demand roles

Germany is suffering a significant talent shortage. The country lacks 310k professionals across science, technology, engineering and mathematics (STEM), and the proportion of students studying in these areas is declining, according to a 2023 report by The German Economic Institute. 

That affects some deeptech startups more than others, depending on stage and sector, says Elisabeth Schrey, managing partner of Germany’s state-backed deeptech and climate tech fund (DTCF). 

Early-stage startups, she says, mostly have an easier time hiring as they can snatch up junior profiles straight out of university and develop them inside the company. But once a company hits scaleup point, it’s harder to hire senior engineers with sector-specific expertise who also have experience in leading, and growing, a team. 

For some deeptech startups, hiring is difficult simply because the industries they operate in are nascent, and the roles they are hiring for are still quite niche, she adds; for example, there is only one qualified quantum candidate available for every three quantum job openings globally, according to McKinsey. 

Nine-person semiconductor startup Akhetonics — which is building a photonic RISC (reduced instruction set computer) processor and is based in Berlin — has so far found it straightforward to recruit the software developers and photonic design engineers needed for its tech. 

But there are still “certain skill set combinations that are hard to find in the field,” says founder and CEO Michael Kissner — like so-called ‘optical quantum system engineers’ — an “uncommon combination” of quantum physics, photonic design, engineering and computer science.

“We opt to find people who satisfy two of these fields and train them in the third,” says Kissner.

Pixel Photonics has found it tricky to find engineers with expertise in analogue high-frequency electronics: few people study the subject, even though many universities in Germany offer it, says Seidenstücker.


International competition

Another issue with hiring talent is the fierce competition from large corporations, which is only going to get fiercer, adds Seidenstücker.

US chipmaker Intel is spending €30bn on building two new factories in the eastern town of Magdeburg, while Taiwanese chipmaker TSMC is building a semiconductor factory in Dresden. 

GlobalFoundries, another US semiconductor company, is also planning to invest $8bn to double capacity at its chip making plant in Dresden. All combined, the companies will create tens of thousands of jobs in everything from hardware and software engineering to AI research science. 

As a result, Pixel Photonics is “rushing” to raise a seed round in order to hire at least 15 new people — across fabrication, accounting and IT administration — before these larger corporations snatch them up, says Seidenstücker. 

However, Gopalakrishnan Balasubramanian, cofounder and CEO at Leipzig-based XeedQ, which has a contract with the German Space Agency to build a multi-qubit mobile quantum processor, says that the reality is that startups “simply cannot compete” with big corporations, especially when it comes to salary. 

Quantum startups like XeedQ need fabrication, process and cleanroom engineers. In academia, salaries for these roles can be around €45k-50k, but most startups offer roughly 10% more than that for “fresh graduates'', says Balasubramanian.

XeedQ offers a starting pay scale of €55k-60k if the candidate has experience in nanofabrication (a particularly rare skillset) or process development. However, corporations can offer roughly 20-25% more than that. 

“We have seen this from candidates with relevant expertise who expect a starting salary of about €65-75k, citing market trends,” adds Balusabramanian.

Germany’s ‘welcome’ to migrant workers falls short

Trying to locate talent outside of the EU is only half the difficulty for Pixel Photonics; the other half is relocating hires to Germany and helping them settle.

Securing German work visas is a complicated process long bemoaned by founders. And dealing with the immigration office as a new employee in Germany is also no picnic. 

Employees from Pixel Photonics have had to wait over four hours to get an appointment at the local immigration office, says Seidenstücker, and many of the officials working there don’t speak English, or choose not to, he says. 

Finding housing is also an issue, especially with landlords who aren’t used to dealing with international clients. Pixel Photonics helps new employees find places to live and deals with landlords itself to ease the language barrier and reassure them that they will receive the money for the apartment. 

“Some landlords couldn’t even imagine that people from India earn that much money in Germany,” says Seidenstücker, describing the xenophobic attitude of some landlords in the country.

The problem he sees with talent relocation is not a “process problem” per se; the mindset of the people working in immigration, housing and related departments is the issue. “I see problems with the welcome culture in Germany,” he says. 

The government’s role

So what could ease the burden of hiring talent as a German startup?

Easing the pathway for migrants to move to Germany is a biggie, says Seidenstücker.

The German government passed a series of reforms in June last year to make immigration to Germany easier for skilled workers, but Seidenstücker says that more work needs to be done in digitalising and streamlining the process of obtaining visas and employment contracts, and educating staff in government departments to be more helpful to, and accepting of, migrants. 

The government could also do a better job of advertising roles being offered by startups to potential candidates in Germany and beyond, to help fill vacancies, adds Seidenstücker.

The issue of increasing the supply of talent in Germany, especially in specialised areas such as quantum, is more complex and will require getting more students to study in relevant fields, say founders. 

In the case of quantum computing, sensing and communication, Kissing says education institutions need to show students what a future career could look like and how the industry might evolve, in order to dispel some of the “scepticism” people have about it. 

One way to do this, says Kissing, would be to promote dual degrees such as quantum physics and computer science and have the government financially support these students, beyond the typical German student assistance (BAfög).

“That way, the student faces less risk when they enter the industry.”

Miriam Partington

Miriam Partington is a reporter at Sifted. She covers the DACH region and the future of work, and coauthors Startup Life , a weekly newsletter on what it takes to build a startup. Follow her on X and LinkedIn