Met a German founder this week and asked him if all the stories one reads about the challenges of startups in Germany are exaggerated. "No, they're understated." Proceeded to describe spending a full day having a 90-page investment contract read to him (mandatory under German law; § 13 BeurkG) by a notary that then charged €30,000. That was for his first company. His second company, needless to say, was not incorporated in Germany.
The harsh truth is that no entrepreneur in his right mind will choose to operate in the U.K or Europe! This excellent WSJ chart shows a sharp & rapid decline in European innovation stance which translates into its small global share of private tech companies valued >$1B - compared to the American & the Chinese share.
The notary thing is a great example of just what it takes to start a company. After that, the real costs & risks begin.
For example, if you get above 20 employees, your employees can vote to form a works-council. Then you effectively have a unionized shop.
"Once a company regularly has more than 20 employees who are entitled to vote and a works council exists, the employer must inform the council in advance and obtain its consent before:
- hiring someone new,
- classifying or reclassifying an employee’s pay grade,
- transferring an employee to a different job or location."
And on and on and on.
Anyone who wants to start a company in Germany should not be in charge of a company. Anyone who funds it should not be in the venture business.
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