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Facing the Big Data Revolution: A German Start-Up Perspective
Facing the Big Data Revolution:
A German Start-Up Perspective
Access to Start-Up Funding
• While strong funding mechanisms for established businesses are in place, startups are
• Expectation that the company is already financially viable in most cases
• New KfW (State-owned development bank) subsidiary aimed to ramp up mid-2018, aims to provide
equity-free startup funding of €2 billion over the next 10 years.
• Funding gaps are being (partially) filled by industry accelerators
• However, these often put the owner at a disadvantage:
• Sizeable equity stakes for marginal investment (reflective of risk tolerance)
• Ranging from 1% to 20% equity stakes
• Often include work-product and IP catch-alls (fine for a company that wishes to insert their offering directly into the
parent organization's value chain and avoid going to market directly, but largely problematic for companies trying to
build up their balance sheet/valuation for subsequent investment).
• Strong angel and VC networks, depending on the stage of organizational development.
02.03.2018 Page 2
Setting up a new Company
• 2008 amendment of GmbHG introduced a 1,-EUR limited liability company (mini-
GmbH/UG), aimed specifically at entrepreneurs who were put off by the 25k EUR
minimum share capital requirement.
• Up until Brexit, many German startups were using UK limited companies to work around
both the personal liability risks and share capital requirements – many are now
regretting this decision.
02.03.2018 Page 3
Insolvency/Bankruptcy in Germany
• Insolvency/Bankruptcy laws improving, but still a significant deterrent for Entrepreneurs.
• In case of failure:
• Personal Liability for Managing Directors in many cases
• Under previous Bankruptcy law of 1877: No debt relief
• Under Insolvency Statute of 1999: discharge of residual debt possible after 6 years
• Under 2014 amendment: discharge possible after 3 years if at least 35% repaid
• Effectively blackballed from large industry – difficult to re-integrate
• More than 90% of tech start-ups fail
• Some other Entrepreneurs that went bankrupt:
• Walt Disney, Henry Ford, P.T. Barnum
• US Presidents (including but not limited to):
• Thomas Jefferson
• Abraham Lincoln (forced to repay his creditors over a period of 17 years, horse seized)
• Donald Trump
02.03.2018 Page 4
How has Adaptant Evolved?
• Founded on the basis of providing user-centric technologies in response to emerging legislation
• Split policy/technology focus - policy shaping technology, technology shaping policy
• Providing technical products & solutions, but also working with companies on transformation
strategies (moving beyond compliance), responsible and ethical data use.
• Novel innovation model – balancing between and aligning R&D/productization/standards & policy.
• Research activities:
• Commercial needs influencing research directions
• Research providing technology transfer and product diversification opportunities (low-risk exploration of new
• Business development in reverse – started at EU-level and now expanding regionally/nationally.
• Multi-sided Business Model – connecting B2C and B2B
• Acquired know-how and competence converted into service offerings.
02.03.2018 Page 5
Adaptant’s Approach to Innovation
02.03.2018 Page 6
Adaptant’s Approach -
three distinct areas of
activity working together,
proactive (regulation as
an innovation enabler)
The Adaptant Innovation Advantage: Putting Regulation to Work
R&D Public &
Technological innovation outpacing and shaping
R&D Regulatory Pull Demand for new technological means to reflect
changes in policy.
Application Push Need for policy or regulation to reflect ways in
which products and solutions are used, without
From To Mechanism Explanation
R&D Products &
Technology Push New technology drives new product
R&D Market Pull Demand for new product/solution to address
Demand for new products/solutions to
operationalise change in policy.
Typical company – top-
down compliance, reactive
(regulation as an
Adaptant’s GDPR-driven Expansion Strategy
• Other countries pursuing GDPR alignment:
• Japan’s (as of May 30, 2017) “Act on Protection of
Personal Information” / 個人情報の保護に関する法律。
• First country outside of the EU to be whitelisted for GDPR
essential equivalency / adequacy.
• Canada – Previously enjoyed adequacy status under its
Personal Information Protection and Electronic
Documents Act (PIPEDA) with Directive 95/46/EC,
reform in progress for GDPR alignment.
• Brazil “Bill of Law on Data Protection - Bill 5276/2016”
currently under review – seeking alignment with the
GDPR (will introduce data protection and privacy rights
for the first time).
• Malaysia’s (as of November, 2013) Personal Data
Protection Act (PDPA) and Personal Data Protection
Standards (as of December 23, 2015).
3/2/2018 Page 7
•Already privacy-conscious, technology-savvy
•Seeking GDPR equivalency
•Access to Digital Single Market
•New rights, little legacy
•Openness to learn and try new things
•Need awareness raising
1. Joint ventures
Issues for Canada
• If Canada wishes to participate in the Digital Single Market, it must get organizations of
all sizes handling data responsibly and in line with the provisions of the GDPR (or
equivalent, whether as an opt-in measure or otherwise), opt-out provisions or exceptions
for company size aren't doing small organizations any favours (most want to sell up to
larger industry, meaning the risk and fines scale up, too).
02.03.2018 Page 8
Issues for Germany
• Better support for innovative startups
• Patent filing subsidies for micro-SMEs to encourage early-stage IP development (as per the USPTO – 90%
reduction of fees for first 4 patents).
• Low-cost instrument for registering ideas at an early stage of IP development (as per Benelux BOIP – 36 EUR
per idea) – a cost-effective method for establishing prior art in future IP scenarios.
• Guidelines for “predatory” behaviour by industry accelerators (equity stakes, IP ownership).
• Development funding / R&D grants for disruptive but high-risk organizations (incl. pre-revenue):
• Risks can be hedged in other ways than financial viability assessment:
• Backing / underwriting by an established industry partner (as per H2020 FTI)
• As part of a project consortium that is able to carry on independent of partner insolvency.
• Acceptance that startups can and will fail, without stigmatizing one-off Entrepreneurs:
• Entrepreneurs that have failed previously have a higher chance of success in subsequent startups (20%) than
first time entrepreneurs (18%), compared with those that have had successful exits (30%).
• Stigmatization is not only a significant loss of potential, but also fails to address the issue it attempts to solve in
the first place:
• First timers carry more risk than those who have tried and failed and aim to try again.
• People will take their skills and knowledge gained and bring this to another country instead – contributing to a growing skills gap
and loss of IP potential.
02.03.2018 Page 9
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