The federal election campaign is entering its final phase, with Germany electing a new government on September 24. This is a good time to reposition the interests of startups.
In addition to numerous associations and private sector organizations, political advocacy is also a core task of the Chambers of Industry and Commerce. Regardless of size and industry, the Chamber of Industry and Commerce represents the interests of all member companies vis-à-vis politicians and administrators.
The Chamber of Commerce and Industry for Munich and Upper Bavaria With 380,000 member companies, it is one of the largest business networks in Europe. Its voice carries corresponding weight in politics and administration.
How the Munich Chamber of Industry and Commerce supports startups at the federal level is explained Dr. Ute Berger and David Stephenson from the Industry and Innovation Department of the Chamber of Commerce and Industry:
Why does the Munich Chamber of Industry and Commerce support startups?
There are two main reasons for this. The first – to put it bluntly: Today's startups are tomorrow's SMEs. Startups are member companies of the chambers, and we are therefore naturally available to support them with advice and assistance. However, startups also face unique challenges, as their technology often still needs to be developed into a product and the market needs to be convinced. They therefore need support, for example, with questions about financing or funding programs.
The second reason is our conviction that startups, with their new technologies and innovative business models, can be valuable partners for established companies. Established companies are thus well positioned for the future – before a particularly disruptive startup shakes up the entire market. Large corporations are very strategically positioned in this regard and specifically seek out startups with which to cooperate. Medium-sized companies have been much more reserved so far – they should put many more startups on their "innovation radar."
What concrete demands does the Munich Chamber of Industry and Commerce make to politicians to strengthen startups?
Financing is a major challenge for startups. This year, we have therefore developed a comprehensive position on startup financing. It contains 14 requirements in four key financing categories: "equity," "debt," "funding," and "revenue."
Compared to other countries, we have few investors and few venture capitalists. We see several concrete options that would help attract investors. One of them is to better take tax-related losses carried forward when an investor joins a startup. Private investors should also be able to deduct their investments immediately and only pay taxes on profits when they are incurred. German rules for investors in VC funds do not need to be stricter than those required by the EU. And professional investors – such as pension funds – need a little more freedom to also invest in young companies. VC funds have become rare – partly because they have to pay higher taxes here than, for example, in the USA. This is a locational disadvantage that must be remedied.
Crowdfunding should also be better supported, as a crowd-winning campaign is the first proof of market acceptance for my idea. Other demands relate to microloans and the removal of barriers to public tenders.
We also see technology development as a key focus. The Chamber of Industry and Commerce has long advocated for tax incentives for research and development activities in companies. Furthermore, technology funding programs must be made more accessible to startups. And we propose that the extremely successful "Central Innovation Program for SMEs – ZIM" be extended to startups at the federal level as well – a "ZIS," so to speak.
Overall, our position has demonstrated a very broad spectrum of potential for improvement in startup financing. This position is thus unique even among the German Chambers of Industry and Commerce.
What steps does the Chamber of Commerce and Industry take to promote the concerns of startups at the political level?
We formulate such positions and present them to political decision-makers. Other associations involved in the topic, such as the BVK (German Chamber of Industry and Commerce) and BVDS (German Chamber of Industry and Commerce), also receive them to further promote these ideas. Of course, we also engage in dialogue with other chambers of industry and commerce in Germany and the DIHK (German Chamber of Industry and Commerce), which represents the interests of all German chambers of industry and commerce and is closely involved in federal political developments.
What say do startups have in formulating such a position? What legitimizes it?
Our work as the Chamber of Industry and Commerce is discussed and ultimately legitimized by the volunteer representatives from the business community – the specialist committees and the general assembly. We deliberately brought several startups and investors into the Industry and Innovation Committee so that we can gain first-hand opinions and experience. Several startups are now also members of our general assembly.
All interested startups were able to participate in the development process of the position. There was, among other things, a large workshop, which also included other startup supporters, associations, and the Ministry of Economic Affairs. In addition, everyone was able to submit written comments on the wording before the position was discussed in various committees of the Chamber of Industry and Commerce and then officially presented to the general assembly for a vote.
What distinguishes the political representation of interests by the Chamber of Industry and Commerce from the work of associations?
A Chamber of Commerce and Industry (IHK) is tasked with representing the overall interests of the economy. Our positions must therefore not unilaterally favor a specific group of companies. They should always keep in mind what is politically feasible. Otherwise, the IHK would quickly lose its credibility with politicians.
What role does the Chamber of Commerce contribution play here?
In the Chamber of Commerce and Industry, every company has one vote – regardless of the amount of its membership fee. Incidentally, over 401,452,000 of the Chamber of Commerce and Industry's member companies pay no membership fees at all because they are still making too little profit.
Because all commercially active companies are members, we can also act as the voice of Upper Bavarian business – and are also perceived as such by politicians.
What happens now that the position has been communicated to politicians?
We'll naturally stay on top of the issue and keep an eye on what's happening in politics and where things are stalling. Fundamentally, political work is a continuous process of evaluations, suggestions, and exchange. For us, this means monitoring existing positions and identifying relevant disruptive factors. After all, after the election is before the election – as the 2018 Bavarian state election demonstrates.
By the way, we also analyzed the parties' manifestos for the federal election with regard to their support for startups. We've summarized the results here.
