Last week, the VivaTech conference took over Paris. The annual gathering brought together more than 150k startups, corporates and investors from around the world for what has become, in just eight years, a four-day show of the best of France’s “startup nation”. This year, Bavaria’s digital minister Fabian Mehring was there to take notes.
The southeastern region of Germany has been vocal about its desire to be a European tech hub; earlier this year it labelled itself as the “California of Europe”.
“There are two hubs in Europe for tech — Paris and Munich,” Mehring tells Sifted.
He was in the French capital to learn from some of the things that worked for the country's tech ecosystem in the past few years.
Since French President Emmanuel Macron was elected in 2017 with the promise of making the country a “startup nation”, its tech ecosystem has accelerated. In 2022, the country even leapfrogged Germany to become Europe’s second best-funded tech ecosystem — the first time in years it had sat above its neighbour.
Bavaria’s Tibi initiative
Mehring wants to make a Bavarian version of France’s Tibi programme — a government initiative that, since 2019, has unlocked billions of euros worth of institutional investors’ money for VC funds.
“We are talking with members of the government in France,” he says.
Germany’s federal government is already working on a country-wide version called the WIN initiative, which it announced earlier this year. It is expected to unlock €3.5bn in investments from both public and private actors.
Mehring is planning to launch a separate programme for Bavaria, which will be smaller in scale.
“I’m interested in the Tibi initiative and the way Macron collected money from the industry to support future tech,” says Mehring. Investors have committed a total of €13bn to the Tibi initiative to date, which has already partly been deployed to the funds selected by the French government.
Although the initiative was recently expanded to early-stage VCs, it was originally intended to put money into growth funds backing later-stage companies needing bigger tickets. Mehring says that Bavarian startups similarly need more scaleup capital.
“What happens in Bavaria is that ideas are born in academia and are scaled in Chinese and US markets,” he says. “We have to bridge this gap. We shouldn’t die in the beauty of academia.”
He points to Lilium, a Munich-based electric air taxi maker that is currently facing difficulties to secure funding. Mehring says that a Bavarian Tibi initiative could resolve this issue — but it wouldn’t be straightforward.
“Germany has a very strong border between what the state does and what businesses do,” he says. “Macron had the ambition to create a private-public partnership, and he did it in a brilliant way. It is something Germany is not used to, and we have to change this.”
Last year, the German government launched a €1bn fund-of-funds for venture, primarily backed by private investors like Allianz and BlackRock, which was considered a significant first for a country where mobilising private capital hasn’t been the norm.
Mehring says that discussions are already underway to create a Tibi initiative in Bavaria, with more to come in the next months.
In a federal state like Germany, however, he says that uniting around a single, strong vision of the country’s digital future can be difficult.
“You need a lead that brings all the initiatives together and gives them one direction,” he says. “Macron does this in France — but it’s missing in Germany.”
Germany’s startup nation
Bavaria was the first German state to set up a ministry for digital affairs, which was created in 2018. At the federal level, digital affairs are part of Germany’s ministry for transport.
In 2019, the region launched the Hightech Agenda initiative with a €5.5bn investment commitment for new technologies like AI, quantum and space.
Together with strong academic institutes such as the Technical University of Munich (TUM) and The Ludwig Maximilian University of Munich (LUM), as well as a rich industrial heritage that includes BMW and Audi, this has fostered a fast-growing local tech ecosystem. In 2023, startups from TUM and its startup lab UnternehmerTUM raised $2bn.
“We want Bavaria to be a homeland for high tech,” says Mehring, “and the good thing is that we can see this ambition is delivering.”
UnternehmerTUM recently topped the FT-Statista ranking of Europe’s leading startup hubs in 2024. Earlier this year, German AI champion Aleph Alpha announced a partnership to provide AI-powered services to Munich’s ministry of digital affairs, and the opening of a new location in the Bavarian capital.
“This is an outcome of the Hightech Agenda,” says Mehring. “I can see global tech companies and big AI champions investing billions of euros in Munich at the moment.”
“We are the frontrunners in German tech. I’d even put Bavaria ahead of Berlin.”
