What it will actually take for Germany’s Startup Factories to work

About a year ago, the German government awarded 10 regional innovation hubs as “Startup Factories”, each backed by up to €10 million in federal funding over five years. Between them, they now involve 126 universities and 144 business and financing partners, with around €110 million in additional private capital pledged. The initiative marks one of the most ambitious attempts in recent years to strengthen Germany’s innovation ecosystem.

But to understand its potential, it’s worth being clear about what this new model is – and what it is not. It isn’t Station F in Paris, the world’s largest startup campus, which Xavier Niel built with roughly €250 million of his own money as a single, privately-run site for already-formed companies to network, find investors, and grow. And it isn’t quite the UK’s own Catapult Network either, which channels around £1.6 billion of government funding into nine applied-research centres on a “thirds” model – a third grant funding, a third commercial revenue, a third collaborative R&D – mostly to help existing businesses adopt new technology. Germany’s factories sit further upstream: ten regional, university-anchored innovation hubs designed to catch research at the point where it transitions into startup founding.

Together with my team, I run one of the ten, the BRYCK Startup Alliance in the Ruhr region. Having spent the last year building one of these from the inside, here’s what I think actually makes a factory that produces globally competitive deeptech companies.

1. Finance the leap from research to venture

The riskiest, least fundable moment for a research spin-out isn’t Series A. It’s the six months before a team even has a product, when the science is promising but there’s no revenue, no customer, and often no company yet. Generic seed funds won’t touch this stage, and university tech-transfer offices rarely have the capital needed to finance it. At BRYCK, we run a €10 million pre-seed fund dedicated to research-based founding teams. Whether through an in-house fund or a closely integrated financing partner, every Startup Factory needs an equivalent mechanism: a standing pot of capital designed to back the most promising teams at the messiest, earliest stage of company creation.

2. Make industry commit

Mentoring sessions for deeptech founders are good, but only part of the equation. What matters even more is access to the right network: industrial partners, test sites, labs, certification pathways, and a first customer willing to run a real pilot. That only happens if industry partners treat their startup cooperations as a genuine business input. The practical fix is simple: make pilot projects an integral part of every partnership from day one, with clear ownership, defined objectives and a commitment from both sides. If a partner can’t point to a specific site, dataset, or business unit a startup can engage with in the first quarter, the partnership is unlikely to create real impact.

3. Judge success by conversion, not activity

The number of startups in a programme is an input, not an outcome. Cohort sizes and event attendance show activity. They tell you almost nothing about whether the model is working. Alumni success shows impact. The indicators that matter are follow-on financing, first paying contracts, international customers, and whether high-potential companies stay headquartered in Europe once they scale. Consistently monitoring these indicators over time would provide a more meaningful basis for evaluating the long-term performance of each factory.

4. Solve the growth-capital gap together

No single factory can fix deeptech’s biggest problem on its own. European deeptech investment hit a record $20.3 billion in 2025, but a 2026 industry report puts the region’s annual funding shortfall at $4 to $24 billion, almost entirely at growth stage, with 70% of late-stage capital already coming from outside Europe. Germany’s own deeptech companies raised around $3.2 billion in 2025, behind the UK’s $5.2 billion with a trend of this gap growing. The UK’s experience is instructive: strong early-stage ecosystems still lose their most promising companies abroad at growth stage when domestic capital won’t write the cheque.

The 10 factories should be lobbying together: for pension and insurance capital to move into venture, for a genuine European growth-stage fund, rather than letting their portfolio companies finding investors and scaling elsewhere.

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5. Change university incentives

A Startup Factory can only be as effective as the universities behind it. If academic success is still measured almost exclusively by publications and citations, entrepreneurial talent will remain the exception rather than the norm. Universities need to reward entrepreneurship alongside academic excellence. That means clear and fast IP licensing, transparent equity policies, and career incentives that recognise company creation as a meaningful academic achievement. Where this works, universities have committed to concrete changes. Where it doesn’t, Startup Factories end up driving entrepreneurship while the underlying system remains unchanged.

The real test

Deeptech is the heartbeat of the next economic era, and whether that heartbeat stays in Europe depends less on how many Startup Factories exist than on whether they do these unglamorous things well. Germany has put roughly €220 million and ten regions behind finding out whether and how true research-based entrepreneurship can produce large-scale impact. Europe, the UK, and every ecosystem watching from outside, should take note, because we are potentially building the blueprint for innovation at scale.