German Startups Increasingly Drawn to the USA
Germany’s tech sector is facing criticism and growing concerns over a brain drain. Alex Karp, CEO of Palantir, recently called the country’s tech scene 'the worst in the world'. Meanwhile, an increasing number of German founders are moving their startups to the U.S., raising fears about the long-term impact on innovation and economic growth.
For years, Germany has worked to strengthen its tech ecosystem. Since the mid-2010s, measures have included expanded startup funding through EXIST grants and the High-Tech Gründerfonds. Tax breaks, regulatory easing, and visa reforms—like the 2012 Blue Card and 2020 Skilled Immigration Act—were introduced to attract and retain talent. Startup hubs, accelerators, and R&D incentives, such as tax credits for AI and quantum projects, aimed to reduce the appeal of moving abroad.
Yet many founders still choose the U.S. Leonie Freisinger, co-founder of AI company Dryft, set up her business in San Francisco after studying at Stanford. She cited Silicon Valley’s dense talent pool, flexible labour market, and ambitious changemakers as key reasons. Investor Simon Schmincke of Creandum described the mood among German founders as 'devastating', with more looking westward for opportunities. The shift comes despite Germany’s efforts to improve conditions. Pilot schemes for founder visas, reduced bureaucracy for startups, and equity-friendly rules were all designed to keep talent at home. But the U.S. continues to pull ahead with its dynamic ecosystem and access to capital.
The departure of skilled professionals could weaken Germany’s economic and innovative strength. While the country has rolled out policies to counter the trend, the future depends on whether these measures will be enough. Observers are now watching to see how Germany responds to keep its tech elite from leaving.
