It was refugee customers at his pharmacy in Wuppertal, Germany that gave Ribal Dib his inspiration. Where, they asked, could they find the ingredients for a beloved Middle Eastern dish? A favourite Syrian cheese?
A year after almost 1m people, mostly Syrians fleeing war, reached Germany in 2015, Mr Dib realised the craving for a taste of home was a start-up opportunity.
“A market in Germany was born overnight,” said Mr Dib, who fled his hometown of Damascus after his pharmacy was destroyed by shelling. “I could bring the homeland to them all, with the press of a button.”
Three years on, his online Middle Eastern food marketplace Mozzaik attracts 5m-6m site visitors a year and serves 180,000 regular customers. The entrepreneur is part of a promising German trend: immigrants are behind 26 per cent of the country’s start-ups — four percentage points higher than their share of the population, a study shows.
According to the research by development bank KfW, immigrants have also established Germany’s most innovative and growth-oriented ventures. These range from Mr Dib’s online market to popular new fintechs such as Raisin, which allows customers to deposit money to banks across Europe and make higher returns, and deep-tech start-ups such as peaq, a decentralised internet platform with a Maltese co-founder.
American start-up hubs such as Silicon Valley were once especially known for immigrant participation — US studies showed more than half of Silicon Valley companies started between 1995 and 2005 were founded by immigrants. But a report by Kaufman Foundation pointed to an 8.5 per cent decline in numbers since 2005, presenting what some German entrepreneurs argue is an opportunity for their country of 21.2m immigrants to capitalise on.
“The United Kingdom and US are underutilising their opportunity now, and I think Germany has a huge chance of making a real success out of its immigrant population,” said Tamaz Georgadze, a co-founder of Raisin, which has raised €200m in investment.
German interest in immigrant success stories has grown since BioNTech, in partnership with US pharmaceutical company Pfizer, announced this month it was set to be one of the first companies to bring a coronavirus vaccine to the market. Glowing articles have highlighted the Turkish roots of Ugur Sahin and Ozlem Tureci, the couple who founded the company. Social media circulated grainy childhood photos of Mr Sahin’s family, who came to Germany as Gastarbeiter, or guest workers.
But behind the high-profile achievements the picture is more complicated.
Strong immigrant representation in start-ups is a reflection of both good and bad aspects of outsiders’ experience in Germany, often linked to difficulties in finding traditional employment.
Mr Georgadze, who left his native Georgia for Germany at the age of 16, might have sought a legal career, but he would have no chance of becoming a judge because he was not yet a German citizen. He worked at consulting firm McKinsey for ten years before founding Raisin, and initially struggled to operate within the established business community.
“My last name was already a barrier some people were reluctant to overcome, because it was too complicated, and obviously I was an outsider,” he said, noting that many generations-old German companies have established networks, which can be hard for foreigners to break into.
Immigrants also struggle with the language, and most of all with Germany’s labyrinthine bureaucracy, which can make it tough to transfer foreign degrees — another factor pushing some towards entrepreneurship.
Paul Wolter, of the German Startups Association, said immigrant representation in German start-ups was still too low compared with other countries. Part of this reflects general barriers, like hefty tax regulations and red tape in founding companies, which are still so challenging that start-up hub Berlin created an office to help companies trying to bring in non-European employees.
Germany also has among the worst social mobility rates in OECD countries, which hits immigrants especially hard. “This is a poison for the economics of the country, because when you have less social mobility, you have less innovation,” Mr Wolter said.
But immigrants can also be more tolerant of risk than native-born citizens, having often made sacrifices to leave their homes.
Mr Dib was warned by a German consultant his plan had a 75 per cent chance of failure. He focused on the potential: “There are 27m Arabs and Muslims living in Europe. This is a huge sector without any big player directly targeting them all.”
Immigrants are crucial for the opening up of broader economic opportunities in Germany, KfW’s chief economist, Fritzi Köhler-Geib, told the Financial Times in an email: “Society as a whole benefits from migrant entrepreneurship, because it reduces inequality.”
Mr Dib’s venture now employs dozens of Arab refugees, as well as Germans, while Mr Georgadze has a 350-strong team of Germans and immigrants from around the world.
Foreign entrepreneurs sometimes struggle to gain interest from German investors, who gravitate to entrepreneurs with similar backgrounds, Mr Wolter said. It is a problem for female entrepreneurs too, and his organisation is pushing investors to pledge more diversity.
Other immigrant founders say their main challenge has more to do with the traditional cautiousness of Germany’s small venture capital scene. They are still sceptical of projects focusing on growth before revenues — a necessity for the deep-tech start-up peaq, which creates decentralised platforms for the Internet of Things and aspires to become a German tech unicorn.
Maltese co-founder Max Thake is still confident that his decision to leave home, drop out of university, and move to Berlin to establish the venture with his German partners will pay off. They have raised €3m so far, and aim to raise another €5m and although they plan to remain in Germany, they are now only seeking overseas investors.
“The future will change [Germany],” he said. “But right now, we can’t stop and wait.”
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