A NEW ERA OF ENTREPRENEURSHIP
Our directors Berit Dannenberg and Rafael Laguna de la Vera join us to discuss the contribution SPRIND can make to the revival of Germany as a business destination.
IS GERMANY SLOWLY DEGENERATING INTO AN INDUSTRIAL MUSEUM?
RAFAEL LAGUNA DE LA VERA: I hear this question more and more frequently in business circles these days, and with an increasingly pessimistic undertone. To answer this question, it is worth looking back to our country’s booming era of entrepreneurship, the so-called Gründerzeit, which began in 1871. Innovators such as Robert Bosch, Gottlieb Daimler, Friedrich Bayer and Alfred Krupp founded industries such as pharmaceuticals, automotive, chemicals and steel and used them to build Germany as an economic nation. After the war and reconstruction, these industries were developed further, and medium-sized hidden champions
also emerged. And we’re still riding on the coattails of that.
BERIT DANNENBERG: However, we are currently seeing innovations that emerged from that era gradually being phased out. Even in the automotive industry, others now seem to be showing us how it’s done. That is definitely making us a little concerned. Nevertheless, we are still a highly innovative country. We have excellent universities and non-university research institutions; however, it seems were are struggling to translate findings and inventions into new companies and industries that create economic benefits.
ONE REASON FOR THIS IS PROBABLY THE LOW LEVEL OF PERMEABILITY BETWEEN SCIENCE, BUSINESS AND POLITICS.
BD: Exactly. There is no clear career path from academia into industry. On the other hand, there are hardly any incentives for people from the business world to switch to politics or public administration and vice versa. Of Bundestag members, there are only a handful of career changers – in other words, actual entrepreneurs and scientists.
RL: In the USA, things are very different. During my stay at Harvard University, I was surprised and thrilled to find that about 70 percent of professors in the university’s business department were entrepreneurs or managers who had been passing on their knowledge for the past ten years of their careers. That would be unthinkable in Germany. Despite having 40 years of entrepreneurial experience under your belt, no one becomes a full professor here without a PhD.
SO THE BAD NEWS IS WE ARE NOT GOOD AT INDUSTRIALIZING OUR TECHNOLOGIES.
RL: Accordingly, we currently rank in a respectable 8th place in the international innovation league table, but we are definitely no longer world leaders. The good news is that there is no shortage of talent and well-educated minds who want to make a difference. We have outstanding scientists who are also successful entrepreneurs. Özlem Türeci and Uğur Şahin, who developed the BNT162b2 vaccine against the coronavirus, are a prime example. As with the BioNTech founders, innovators are often people with an immigrant background, who often have to act unconventionally if they want to be successful in our society.
BUT THE FOUNDERS OF TOMORROW ARE HERE; THEY LIVE AMONG US. WE JUST NEED TO GIVE THEM A PLATFORM. AND THAT’S ALSO WHAT SPRIND IS FOR.
BD: Our main task is to turn our innovations into industries that secure future prosperity again. In contrast to normal
innovations, disruptive innovations are characterized by the fact that they are not merely improvements on what already exists. When a disruptive innovation comes into being, the world is noticeably different afterwards. If we succeed in overcoming the siloization
of our systems, Germany will develop enormous strength as an economic nation. SPRIND acts as a kind of real-life laboratory for this transformation.
RL: With AI, we are currently experiencing the dawn of a platform for disruptive innovations, and the internet and mRNA vaccines also belong in this category. Through SPRIND, we want to identify such promising innovations and help to bring them to fruition. We also analyze the main systemic barriers to innovation and consider how our work could be generalized and such translation made the social standard.
BD: One example of this is IP transfer from universities and research institutions to industry, which continues to be very difficult today. It is still often incredibly laborious and time-consuming for sciencepreneurs
at universities to transfer their intellectual property (IP) to a company and use it commercially. Quite a few give up after two or three years of negotiations, or have to sign contracts that hinder the further development of the start-up. To overcome these obstacles, we worked with 17 universities and research institutions to develop evaluation models and contract templates for simplified and standardized IP transfer, which we published at the end of 2023.
ONE QUESTION THAT IS OFTEN ASKED IS WHAT DOES THE STATE HAVE TO DO WITH THE INNOVATION BUSINESS?
RL: Here, too, it’s worth thinking back to the business boom of the first Gründerzeit. At that time, the German Empire had provided scientists with reparation funds from the Franco-Prussian War so that they could build their companies. The roots of Bayer, Daimler and BASF all date back to this time. All three were heavy IP
start-ups that were endowed with millions of Reichsmarks – which equates to several billion euros today – to get their innovations on the road. At the same time, the systems were much more permeable than they are today. In the German Empire, there were outstanding researchers who carried out their professorships in a very business-oriented manner and made it easier for their doctoral students to move in and out of the business world. Right from its infancy, the German Empire thus triggered an economic boom that lasted for decades, complete with stock market hype and crash. Today’s state needs to incubate in the same way whilst also removing obstacles to innovation from the path. The money is there, because the return on investment will be huge. We just have to do it. However, for this to happen, the state needs to pluck up the courage to go out on a limb. Our agency is like a living lab to nurture this courage.
IS SPRIND A GERMAN COUNTERPART TO THE US INNOVATION AGENCY DEFENSE ADVANCED RESEARCH PROJECTS AGENCY (DARPA)?
BD: When we developed SPRIND five years ago, one of our role models was of course DARPA, which was founded by US President Eisenhower in 1958. This provided funding to founders, who then had full order books thanks to the US military as their largest customer. It yielded countless disruptive innovations that made the USA great, from spy satellites – which later gave rise to GPS – the forerunners of the internet and driverless vehicles to voice recognition software. DARPA was and is a state-subsidized and breathtakingly efficient incubator. Contrary to popular opinion, it is just not that Silicon Valley is the product of the free market alone.
RL: We took a very close look at DARPA and its predecessor ARPA and adopted many features. However, DARPA enters and leaves technological development cycle much earlier. We are not involved in basic research, as we already have a very good basic research landscape in Germany. Our domain is applied sciences, in other words, the translation of fundamental knowledge into economically viable companies. This means that SPRIND can therefore support projects for much longer. We’re now a role model for countries that are setting up similar innovation agencies.
HOW MUCH FUNDING CAN SPRIND USE TO SUPPORT INNOVATORS?
BD: In 2022, we invested more than 100 million euros. This increased to 160 million euros in 2023, and in 2024 it will exceed 220 million euros. This makes us one of the largest deep-tech funders in Europe. So far, we have examined 2,111 projects, funded 163 of them and taken 21 to large-scale financing. This includes the 40 teams that are currently receiving funding through eight SPRIND challenges and sparks. All these teams are working on the big issues of our time, so we can certainly say from our own experience: We have many outstanding inventors!
RL: Providing we obtain enough money to fund our work – after all, our budget has to be approved by the Bundestag every year – it is almost inevitable that this will result in two or three disruptive innovations in the coming years. In game theory terms, you could say the roulette table is full. However, while it is not cost-efficient to place a chip on every number in a casino, it is highly effective with disruptive innovations. As we have seen with the breakthrough innovation of mRNA vaccines, the benefits are immense. The success of BioNTech alone has led to Rhineland-Palatinate being promoted from a recipient to a donor state in the federal financial equalization scheme. And this company has only been operating for five years. Our project portfolio includes companies that are working on novel drugs against cancer, Alzheimer’s disease and viral infections. If we imagine that just one of the projects were to take off, and at the same time consider how important topics such as cancer and Alzheimer’s are, then we get an idea of how huge the impact of a single disruptive innovation can be.
IS SPRIND A PANACEA AGAINST WIDESPREAD PESSIMISM?
BD: Pessimism is like fear: There are situations in which both emotions are perfectly appropriate. Sometimes they can even be essential for survival. In the vast majority of cases, however, they act like archaic brakes and there is no place for them whatsoever. We only need to take a look around ourselves to see that the world is full of terrible problems, but the bottom line is that the situation on our planet has demonstrably and significantly improved over the past 300 years. Many of the major challenges of our time – energy and climate, water, diseases – can be solved with technology. This also requires social innovations that, on the one hand, ensure they go to society
and take people with them and, on the other, prepare them for our new world through education.
RL: The latest major disruptive innovation that has found its way from Germany onto the streets – the mRNA vaccines – shows us that this can be done. Why did they work? Because during the coronavirus crisis, for once we bent the rules a little
, quickly funded two teams – Curevac and BioNTech – and changed the regulatory framework. And that’s exactly what we need to do in other areas, too. We need to be bold, remove barriers to innovation and get things rolling, even without a major crisis breathing down our necks. We dealt with the gas crisis in a similar way. For example, a lot of regulations and laws were simply suspended in order to build LNG terminals in record time. It is possible!
WHAT CAN EACH AND EVERY ONE OF US DO TO USHER IN A NEW ERA OF ENTREPRENEURSHIP?
BD: SPRIND projects enable those who are not firmly bound to path dependencies decide which way to go, and we fund them to do it. In doing this, we are well aware that the vast majority of new approaches will fail. If most of them don’t fail, it simply means we haven’t taken enough risks. In other words, failure doesn’t matter as long as some innovations take off. And we only need two or three new industries.
RL: That’s why we love our job. Every day we see innovations that have the potential to change our country and our lives for the better. We therefore have good reason to be optimistic – and this in turn is a prerequisite for success. Those who allow themselves to be carried away by pessimism are shooting themselves in the foot. For this reason alone, every entrepreneur should be optimistic in their basic outlook. My advice to entrepreneurs would be to go to universities as guest lecturers! Support researchers with their spin-offs, talk about entrepreneurship! Open up your companies to innovations from outside, distribute money to venture capital funds and sit on their advisory boards so that you can see the project pipeline. And if you see a start-up that you really like, get involved, invest and profit. The bottom line is that it will pay off many times over – for you, your company and the period of booming entrepreneurship that lies ahead.
