A historical weight

Germany, in particular, has a complicated relationship with entrepreneurship. Historically, Germany has had phenomenal periods of entrepreneurial activity. The end of the 19th century even bears the name Gründerzeit – the founders’ era. Liberal corporate laws, a unified nation, and cultural optimism drove innovation. Seven of the current top 10 listed German companies by market cap were founded in the late nineteenth century. Groundbreaking technological innovations such as the automobile and the electric generator (self-excited dynamo) emerged.

Similarly, in the United Kingdom, the Victorian era (c. 1850–1900) produced its own founders’ boom. Free-trade policies, the Limited Liability Act, and London’s deep capital markets enabled railways, steel, shipbuilding, chemicals, and consumer industries to scale rapidly. Entrepreneurs embodied a culture that celebrated invention and risk, while the British Empire’s global networks opened markets and capital flows. This legacy – finance-first and outward-looking – helped entrench a pro-entrepreneurial self-image that endures.

Today, following the turmoil of the early 20th century and two catastrophic wars, risk is avoided, failure carries stigma, and regulation often slows experimentation. Compared with the US, where entrepreneurship is celebrated, founders still face social and institutional scepticism, especially in Germany.

Why it matters now

This isn’t just cultural history; it affects Europe’s startup pipeline today. While Germany has world-class research institutions, such as the Max Planck network, technology transfer lags. Promising ideas get stuck in the lab or in small pilots that never scale. Meanwhile, talent often leaves. Many of the most ambitious German founders are starting companies abroad, drawn by deeper capital pools, faster-moving markets, and a culture that tolerates bold risk.

What can change

If Europe wants more global-scale startups (which it most definitely needs to propel GDP growth), several shifts are needed:

• Cultural reframing of risk: failure should be seen as a natural step, not a career-ending stigma. Universities and research institutions must embrace commercialisation as a core mission, not a betrayal of science
• Accelerated tech transfer: public funding should come with more precise mechanisms for spinning research out quickly and supporting entrepreneurs who leave academia
• Deepening the capital markets: governments need to bestow public universities with endowments that, in turn, can be reinvested in private markets and propel the company-building flywheel
• Talent circulation: Europe should encourage returnees – founders who built abroad – to bring back skills, capital, and networks. Startup-friendly tax rules, and stronger recognition would help
• AI and the SMEs: the rise of AI represents both an existential threat and a generational opportunity for Europe’s SMEs. Rather than fearing automation, SMEs could adopt AI to strengthen their competitiveness globally. That requires capital, yes – but also a cultural embrace of adaptation

The opportunity ahead

The paradox is that Germany and Europe have everything they need: talent, institutions, and capital, to build great companies. What’s missing is the cultural permission to build boldly. The Gründerzeit and Victorian eras proved what happens when society embraces risk and rewards ambition. AI and global capital are creating another inflection point. Europe can either nurture the next generation of founders at home or watch them build elsewhere.

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