Isar Valley: How Munich became Europe's startup capital – DW – 06/04/2025

DW

3 days ago

In the Bavarian capital, international talent meets an ecosystem built to help startups succeed. Here, founders gain access to capital, expertise, and networks that can turn ideas into thriving businesses.
It's like navigating a labyrinth — a journey hundreds of young entrepreneurs across Europe embark on each year in search of opportunity, innovation, funding, and success. They're also looking for the country and city that offers the ideal conditions to launch a business.
For an increasing number, that journey leads to Isar Valley, named after the river that runs through Munich, and which provided the informal nickname for the Bavarian capital's technology and artificial intelligence (AI) scene, inspired by the Silicon Valley technology hub in California.
Munich's Technical University and its entrepreneurship center are essential for startup founders Image: UnternehmerTUM
Munich ranks 17th globally in the latest Global Tech Ecosystem Index compiled by Netherlands-based data provider Dealroom.
When measured by high-performance, innovation-driven ecosystems with strong per-capita output, Munich rises to 5th place — just behind US tech hubs San Francisco Bay Area, Boston, New York, and Cambridge.
From hackathon enthusiast to startup founder
Greek entrepreneurs Nikos Tsiamitros and Georgios Pipelidis also chose to launch their startup in Munich, even though Tsiamitros says there wasn't a "personal reason" to move to the capital of the German southern state of Bavaria.
"I didn't know anyone here and had never even visited the city," he told DW, but added that he was well aware of the "excellent reputation" of the Technical University of Munich (TUM).
Nikos Tsiamitros (left) and Georgios Pipelidis were drawn to Munich because of its excellent startup environment Image: Georgios Pipelidis
Tsiamitros arrived from Athens to pursue his master's degree in Munich, while Pipelidis came to TUM via Austria to complete his PhD.
"That's where we started working together on navigation software for public transportation," Pipelidis told DW.
They joined a hackathon — an event where programmers team up for several days or weeks to develop software, often around the clock — and they won the competition.
"From that moment on, we started to believe that our navigation and localization algorithm could become a real startup," said Tsiamitros.
Then, in March 2019, they launched their first startup business called Ariadne — derived from the Cretan princess in Greek mythology who gave Theseus a thread to find his way out of the Minotaur's labyrinth.
A fitting metaphor for their software, Pipelidis noted with a grin.
UnternehmerTUM provides support with substance
But having a strong algorithm is one thing. Launching a startup, writing a business plan, and securing capital is another. That's where Munich's startup ecosystem offers a crucial resource — the UnternehmerTUM entrepreneurship center based at TUM.
At UnternehmerTUM, the two business founders learned how to start and run a company, Pipelidis said, adding that thanks to that support, Ariadne was generating revenue just a few months after launch.
Ariadne's main product has since evolved from a navigation software into an AI-based people-counting and movement analytics tool. Today, it serves airports in Munich, Glasgow, and Los Angeles, as well as the German cities of Leverkusen, Bielefeld, and Regensburg, plus several malls and retailers, including IKEA.
Startups like Ariadne also benefit from hands-on mentorship. Barbara Mehner, managing partner of the Xpreneurs incubator at UnternehmerTUM is one of them.
"We help early-stage startups enter the market by connecting them with investors, mentors, and potential customers," she told DW.
KEWAZO 'liftbot' and the robotic revolution in scaffolding
Among the more than 100 tech startups founded annually in Munich is KEWAZO, a company led by Greek founder Eirini Psallida.
Eirini Psallida is one of many successful startup founders who have emerged from the Isar Valley tech hub Image: Eirini Psallida
KEWAZO's core product is a battery-powered, remote-controlled robotic lifting system called LIFTBOT. This robot facilitates the transport and assembly of scaffolding and other construction materials.
"All industries seemed fully automated — except construction," Eirini told DW, explaining the idea behind the company. Psallida named the startup after the Greek word kataskevazo, meaning "to produce." And like Ariadne, this startup was born out of a hackathon at UnternehmerTUM.
Today, the company's robotic lift system is in daily use at major industrial and construction sites — from the chemical park of BASF in Ludwigshafen, Germany, to oil refineries in the US.
KEWAZO's liftbots are seen on many construction sites, like in Dublin, where they helped rebuild the Presbyterian Church Image: Eirini Psallida
"I can't imagine how we would have done it without UnternehmerTUM," Psallida told DW, as the incubator gave them access to hardware, software, legal and business advice. "And we got help securing public funding without giving up any equity," she added.
One in four German unicorns founded by foreigners
The KEWAZO team includes six founders from four different countries, reflecting the diverse nature of Germany's startup landscape.
According to the latest Migrant Founders Monitor compiled by the Friedrich Naumann Foundation and Germany's Startup Association, a significant number of founders in the country have a migration background.
"Fourteen percent of startup founders were born abroad," says Vanush Walk, senior researcher at the Startup Association and lead author of the report. Among the founders of so-called unicorns — startups valued at over a billion dollars — the share is even higher at 23%, he told DW.
The survey shows that migrant founders stand out for their "strong entrepreneurial mindset, willingness to take risks, and resilience" — traits that are crucial for startup success.
Migrant founders face higher barriers still
Despite their strengths, migrant founders also face notable challenges in Germany.
"Top of the list is access to networks," said Walk, adding that coping with Germany's infamous bureaucracy is also difficult, as well as gaining access to funding, no matter whether public or private.
Germany: More support for migrant entrepreneurs?
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Georgios Pipelidis from Ariadne experienced this firsthand. One German venture capital firm made its investment conditional on replacing him as CEO with a German national. "They wanted a native speaker as the public face of the company," he recalled.
"I understand that customers prefer dealing with someone who speaks fluent German — that's why all our salespeople are native speakers. But replacing me as CEO? That was too much," he said.
In the end, Georgios Pipelidis and Nikos Tsiamitros secured support from a Greek VC firm. And despite the setbacks, their enthusiasm for Munich hasn't wavered. At the end of their own Ariadne thread still lies the Bavarian capital.
This article was originally written in German.