Lucy Lyons, cofounder and CEO of Kestrix.


October 18, 2023

When it comes to attracting startups, Germany is its own worst enemy

When I looked into building my startup Kestrix in Germany, scores of foreign entrepreneurs warned: don't do it

Lucy Lyons

5 min read

In 2019, I moved to Germany to start a career in climate tech and eventually landed a job at Plan A, the carbon accounting software firm. 

I marvelled at the resources available. Government-sponsored grants were so plentiful that we needed to hire employees just to fill out the applications. 

Friends were quitting their jobs to take advantage of six-month-long, city-sponsored accelerator programmes that came with stipends. 


Berlin felt like the place to build.

Innovation hub

Ever since Karl Benz patented the world’s first automobile in Germany in 1885, the country has been a hub for high-tech innovation.

Millions have been invested in R&D and a stellar education system in the years since, while a supportive policy environment has helped Germany become a global leader in chemicals, pharmaceuticals, robotics, manufacturing and software exports. 

The country also leads in the energy transition, too: market mechanisms to incentivise solar R&D and adoption (like feed-in tariffs) have played a huge role in the global decline of the cost and subsequent adoption of solar worldwide. 

It is a place where innovators go. 

My journey

I left Berlin for Oxford in 2021 to do a master’s degree, and then raised £750,000 in pre-seed funding for my startup, Kestrix. Germany felt like the obvious place to build my business. 

Except that it wasn’t. 

The first hurdle was my visa. I am an American, and as a business owner, from what I could tell, I had the choice between an entrepreneurial visa or a freelance visa. The former allows you to move your business to Germany, the latter allows you to be paid as an employee of your business as long as you have other clients. 

Simple, right? 

Wrong. An entrepreneur visa sounded great until you look at the fine print. In order to qualify, you had to submit a business plan, the requirements for which resembled an EU grant application. They wanted market analysis, financial projections, exact funding requirements and a fundraising plan, as well as German legal compliance. 

Reading rants from scores of foreign entrepreneurs lamenting the process I read warnings: don’t do it

Others in the same position reported waiting up to 10 months for the visa application to be processed, during which time they had to remain in Germany and had to apply for special permission to leave the country. 

As for the freelance visa, there were benefits. Others had used it as a ‘hack’ to avoid the entrepreneur visa, with one American friend telling me she had incorporated her own personal holding company and began billing her company from her holding company for hours of work. She took other jobs to qualify her as a freelancer and avoid her visa being revoked. It was feasible, but slightly too shady for my liking. 

"Don’t do it"

I decided to look into it, scouring LinkedIn, Facebook and Reddit, and reading rants from scores of foreign entrepreneurs lamenting the process. I read warnings: don’t do it. 

They told of appointments upon appointments with notaries, mounting legal fees and months of waiting. I found out that even setting up a German office through which I could effectively hire myself would require registering with no less than four government departments, in person, with conversations conducted entirely in German. A tax consultant, the hiring of whom was required by law, would cost at least €1,300 per year.


Worse still, because we have two founders, ostensibly we would need to go through the whole process twice — setting up our own personal holding companies that would own our shares in the business because entrepreneurs are advised not to own shares in their companies directly in Germany for tax reasons. 

Finally, we would need to have €25,000 in share capital to spare – the minimum required to set up a German GmbH, equivalent to a UK limited company.

It’s not that I couldn’t have done it. I had been an employee at a number of startups and I minored in German at university, so I was used to paperwork. But it was a matter of time: I was just starting my business and had none of it, and I could not justify to my co-founder focusing on this instead of other more urgent things. 

Then there was the fact that VCs didn’t want to be involved in German companies. I was told by one: “Wherever you are, we are fine to invest, unless you have a German entity.” 

London calling

Perhaps I would have persisted if it wasn't so easy to stay in London. As an American and a graduate of a UK university, getting a graduate visa — which also allowed me to become a company director — was an easy process. 

Six weeks after applying, my visa was sent to me by email. Even if I hadn’t gone for a graduate visa, I had a number of other options, like the global talent visa and high potential individual visa.

As for company incorporation, it required even less effort than the visa: 20 minutes, in fact, and about £12. Not a single lawyer or tax professional was required. 

As a founder, I would rather live in Berlin. For the price I pay for a single room in a four-person flat share in London, I could have a two-bedroom apartment in the heart of the city.

It is home to some of the best climate investors and most visionary entrepreneurs, and some of the best engineering talent in Europe. 

So, why doesn’t it make it easier for outsiders to come and play a role?