HOW WIDELY ENGLISH IS USED AS A FIRST OR SECOND LANGUAGE IN GERMANY

• Europe Language ranked Germany seventh with a score of 62.35% among European countries that can speak English best.
• Germany has been using English as a second language since 1960s. English is also a mandatory school subject in Germany, and lessons start in second or third grade.
• Since about 50 years ago, German students started learning basic English conversations before expanding to complex vocabularies and proper pronunciation and spelling.
• Teachers speak to students in eighth grade exclusively in English that follows perfect grammar rules.
• In big cities like Berlin and Frankfurt, most people can speak near-perfect English. Locals in big cities can also speak good English; however, in rural areas, it is rare to find English speakers.
• Older generations aged 40+ speak little English because it became mandatory after the 1960s.
• English has spread widely across Germany, causing some discomfort among Germans who feel that their language and culture are under threat.
•  Several politicians have also raised concerns over the increasing number of Germans using English in everyday life. Examples include some waiters in Berlin who speak only English.
• Senior German lawmakers want the European Union to stop using English as its working language following Brexit, and are proposing Germany instead.

GENERAL POPULATION SPEAKS ENGLISH

•  56% of the population speaks English as a second or first language, while 95% of the population are still using German. In 2019, the total population of Germany is estimated at 82,438,639.
• Based on the total population figure and the percentage of English speakers in Germany (56%), it can be estimated that approximately 46,165,637 Germans speak English. The calculation is included in the methodology section.
•  59% of Germans are in favor of the recognition of English as an official language in the European Union.

HOW WIDELY USED IN EACH COUNTRY FOR BUSINESS AND IN ADVERTISING OR MEDIA

• In a survey, 18 out of 30 top companies listed on the DAX index said that they use English as their official business language, including in their key documents, announcements, and guidelines.
•  Only three companies in the research stated that their official language remains German, whereas most German firms are switching to English as the primary language for meetings and communication.
• German car maker Volkswagen said it would make English its corporate language across its 120 global sites because it hires more people abroad.

• Results of a study on language in advertising stated that 62% of Germans admitted that they did not understand the English used in adverts. Another 72% of the respondents were unable to translate the English used in the ads into German correctly.
• German companies are embracing English, which they use in advertising and marketing to their international customers. Previously, German companies advertised products using German phrases, and some ads featured a combination of both English and Germany.
• Many Germany radio stations also play a lot of English music. For instance, American pop is popular in Germany and has contributed to English-speaking in Germany.

RESEARCH STRATEGY

DIGITAL BANKING BY INDUSTRY: GERMANY

RETAIL INDUSTRY

•  SOFORT Banking is a real-time online banking payment service available to customers with a bank account in Germany, Austria, Belgium, or the Netherlands. In Germany, services like SOFORT fill the gap between mobile payment and point-of-sale systems.
•  Increasingly, Germans are using e-wallet payments in their national eCommerce market. According to Worldpay, e-wallets are expected to surpass bank transfers as Germans’ preferred eCommerce payment method by 2021. Experts expect that PayPal, Apple Pay, and Android Pay will overtake bank transfers (capturing 23.9% of the market) in the coming years.

TRAVEL BOOKING INDUSTRY

• The travel booking industry is composed of e-wallet payments for both offline and online travel booking (i.e., flight, bus, train, hotel, transit & toll, metro & cab bookings). Additionally, these bookings include domestic and international travel.

MOBILE PAYMENT INDUSTRY:

• Germany's mobile payment industry includes mobile recharge; bill payment (e.g., fuel, healthcare, wellness, and credit card payments); insurance payments; rental payment; DTH recharge/payment; broadband/data cards recharge/payment; and landline recharge/payment. The mobile payment industry in Germany is expected to grow at a CAGR of 9.2% to reach $248,347.3 billion by 2025.

ADDITIONAL INSIGHTS: DIGITAL BANKING SERVICES IN GERMANY

• The German Federal Financial Supervisory Authority (BaFin) approved First Data as an e-money institution in Germany.
•  E-money systems like GeldKarte, PayCard, CyberCash, and eCash have not played a pivotal role in Germany's e-banking and e-money markets. CyberCash and eCash discontinued operations.
• Financing investments in Fintech startups in Germany accounted for €541 million in 2017, less than the e-commerce startup sector.
• Payment institutions (PIs) and electronic money institutions (EMIs) are focusing on strengthening customer loyalty to counter possible threats from BigTech firms.
• A significant number of PIs and EMIs are developing innovative products jointly with FinTech firms and technology providers.
•  Nearly six million people in Germany (i.e., 8% of the population) uses mobile payments. However, eMarketer reports that the full adoption of mobile payments is held back by Germany's cash culture. That said, Apple Pay is expected to launch in Germany shortly to compete with Google Pay, which launched in June 2018.
• The value of Germany's mobile wallet payment segment is forecast to increase at a CAGR of 8.9% during the 2018-2025 period. And Germans' willingness to accept remote advice and digital sales is well above the actual levels, which, according to McKinsey, is 36%.

ADDITIONAL INSIGHTS: BANKS IN GERMANY

• Between 2000 and 2017, the total number of banks in Germany declined by 43% to 1600, and the number of branches declined by 46% to around 30,000. Germany’s banking system is composed of three pillars: private-commercial banks (with 40% of total bank assets), public-sector banks (26%), and cooperative banks (17%).

ADDITIONAL INSIGHTS: LIST OF EMI AND DIGITAL BANKS IN GERMANY

•  Anytime France for EU/EEA
•  Bred Espace France for EU/EEA
•  Bunq Netherlands Mobile Netherlands Maestro for EU/EEA.
•  Deutsche Handelsbank Germany by Bank Sofort for Own Non- Business
•  Hello Bank France by Bank BNP for Personal
•  Holvi Finland by MasterCard Germany E-money Wirecard for EU/EEA Business
•  ImaginBank Spain by Spain Bank for EU/EEA Personal
•  LeuPay Malta / Bulgaria by Malta MasterCard Bulgaria for personal
•  MisterTango Lithuania
•  Monese Estonia Mobile for EU/EEA Personal
•  MoneyPlusCard 
•  N26 Germany by Germany MasterCard for EU/EEA
•  PayMix Malta Web
•  Paysera Lithuania by Lithuania Visa UK E-money
•  Revolut UK, aggregate IBAN MasterCard UK E-money for EU/EEA Personal
•  Swirl Card Ireland for Personal
•  Viabuy Germany by MasterCard Germany for EU/EEA Personal
•  Worldcore Czech Republic by Czech Republic MasterCard

RESEARCH STRATEGY

INDICATORS OF HOW COMMON DIGITAL BANKING IS IN GERMANY

• In 2018, Germany ranked #15 in online banking penetration in the European Union (EU), which represents 9 million online banking customers.
• According to a report, 51% of people in Germany would be open to purchasing financial products from "established technology companies".
• Approximately 59% of Germans make use of internet banking, "which is above the EU average" but below other countries like France, Belgium, UK and the Netherlands.
• Currently there are about 700 fintech startups in Germany. This number has increased by an average of 33% each year "over the past decade". Its capital, Berlin, "is one of Europe’s key fintech hubs".
• Due to fintechs, German banks are losing around €1.5 billion (3% of their retail revenue) each year. This number is expected to reach €2 billion a year by 2022.
• Nowadays, people who live in Germany have numerous mobile banking options such as national German banks (Deutsche Bank and Commerzbank), online-only banks (bunq and N26), international banks (HSBC), and mobile payment providers (Apple and Google).
• In Germany, 79.8% of millenials manage everyday banking tasks, such as making transfers and "checking their account balance", exclusively online.

HOW PEOPLE ACCESS DIGITAL BANKING

•  Desktop and laptop is still the most popular way of accessing digital banking, while smartphones make up over 35% of all digital transactions among millenials.
• In this country, 27.4% of banking customers prefer banking via a smartphone or tablet.
• It is estimated that around 50% of mobile users in Germany use their smartphones for banking.
• According to a survey, 66.1% of German millennials would be open to access all their financial information through a single app (open banking).
• According to a Facebook survey, 37% of Germans aged 18 to 34 use an "app to transfer money to family or friends". This demand is being covered by apps like N26 (based in Berlin), which has 2.5 million customers.
• Also, 91% of Germans aged 18 to 34 are "comfortable interacting with a bank on a messaging app".

Number of Apple pay users in Germany

• There are 2.001 million (triangulation below) Apple Pay users in Germany.
• The market share of Apple Pay in Germany is 29%.
• The number of people in Germany that use mobile payment is 6.9 million.

Number of payment terminals accepting Apple Pay in Germany

• The number of payment terminals for Apple Pay in Germany was 820,000 as of 2018.

Research Strategy:

What was not found?

• Number of Apple pay payments by volume (e.g. 1,000 per month) in Germany
• Number of Apple pay payments by value (EUR) in Germany

Calculations

Number of Apple pay users in this country

• Number of Apple pay users in Germany = percent of mobile payment users that use Apple Pay * Total number of mobile payment users
• Number of Apple pay users in Germany = 29% * 6.9 million 
• Number of Apple pay users in Germany = 2.001 million

USEFUL FINDINGS

• One of Google Pay's partners in Germany, N26, noted a constant increase in demand by customers for mobile payment services.
• Google Pay can be used in 19 countries and regions.
• Google Pay made its debut in Deutschland on June 2018, making it the 19th country in the world to introduce the mobile payment service.
• Google Pay help page confirmed that four local banks, which are Wirecard, Comdirect, Commerzbank, and N26, are now supported by Google pay.
• With Visa or MasterCard issued by Commerzbank, Comdirect, N26, or Wirecard’s Boon, one can add it as a prepaid credit card and skip the lengthy identity verification process, which is known as the know your customer (KYC) process.
• Google Pay only works on Android phones, and Apple’s iPhone only has a 20 percent market share in Germany. Even with the speculation about Apple Pay's imminent arrival, it is nowhere to be seen.
• Consumers can use the service of Google Pay at businesses such as Aldi, Lidl, McDonald's, and Media Market.

RESEARCH STRATEGY

BANKING & LENDING SERVICES

• There has been an increase in banking and lending services offered in the financial services sector to businesses in Germany.
• As of 2018, about 84 Fintech companies were decisively advertising to German customers about their presence and willingness to offer services.
• According to Ernst & Young (E&Y) GmbH, about 35% of foreign founded Fintechs that have a presence in Germany offer banking and lending services to their customers.
• As of 2018, about 42% of Fintechs operating in Germany but founded outside its shores offered B2C services, while 39% offered B2B services.
• About 19% of Fintechs operating in Germany but founded outside its shores offered both B2B and B2C services in 2018.
• Lendico, a German-based Fintech has raised $22 million in total funding and offers online P2P lending platform services to small businesses (SMEs) and individual borrowers.
• Founded in 2013, Lendico helps retail investors and small businesses (SMEs) to invest in its platform. Arrowgrass Capital acquired Lendico in 2017.
• The peer to peer (P2P) lending market is estimated to surge at a CAGR of 51.5% between 2016 and 2022, due to new/emerging markets, increasing knowledge of the lending marketplace, higher investment transparency, as well as "lower interest rates" accrued to consumers.

MORE B2C THAN B2B SOLUTIONS

• There has been a growth in B2B business solutions offered in the financial services sector to businesses in Germany.
• More foreign founded Fintechs (42%) are offering B2C types of solutions to German-based businesses than B2B solutions.
• As of 2018, locally founded Fintechs (43%) were offering B2C types of solutions to German-based businesses than B2B solutions (42%). About 100 local-founded Fintechs have a stronger base in Germany than abroad.
• Deposit Solutions is a German-based Fintech that was founded in 2011 and has raised about $144 million in funding.
• Deposit Solutions offers financial services that are "revolutionizing the value chain" for savers as well as banks. The solution is an open-architecture platform which allows organizations to gather retail deposits onto a home balance sheet without the need for a "proprietary local retail infrastructure."
• Another Fintech, eBillme, has raised about $23 million in funding and provides online payments solutions that successfully extend online banking to the checkout process of merchants. This B2C solution allows business organizations to checkout their consumers during purchase successfully.
• According to Ecommerce Germany, new technologies from the digital era are being used in everyday life and shopping. E-commerce happens to be a growing industry due to the numerous advantages it brings.
• E-commerce (retail) is a B2C business model.

PAYMENT SOLUTIONS

• Several Fintechs in Germany are offering payment solutions to business organizations.
• As of 2018, about 27% of foreign-based Fintechs present in Germany offered payment solutions to business organizations in Germany.
• N26 bank cooperates with other Fintechs in Germany to facilitate payment solutions for "selected retail partner companies."
• Traxpay is a German-based Fintech that was founded since 2012 and has raised about $19 million in funding. Traxpay provides a platform to facilitate round-the-clock B2B payments solutions and transactions in real-time.
• According to Boston Consulting Group (BCG), the payments market is predicted to grow by $1.1 trillion between 2010 and 2027. It has been "growing at a CAGR of 6.8%" since 2010.
• The growing demand for non-cash-based payment is driving this growth and providing a windfall of opportunities for payments providers. Germany, Spain, and Russia will benefit from this market.

BUSINESS PROCESSES AND TECHNOLOGY

• There is a proliferation of business process and technology services being offered in the financial services sector to businesses in Germany.
• As of 2018, about 17% of local-based Fintechs offered processes & technology-based solutions to business organizations in Germany.
• About 27% of foreign Fintechs (founded outside Germany) offered processes & technology-based solutions to business organizations in Germany as of 2018.
• Founded since 2015, Zeitgold has raised about $27.5 million in funding. Zeitgold offers AI-enabled services to automate the process of payroll, bookkeeping, as well as other financial services for businesses and local merchants.
• Zeitgold uses automation technology and optimized processes to capture the financial data of business organizations and turns the data into a "complete, structured, high-quality," and updated data set for the businesses.
• The global market for accounting software was $11,071.6 million as of 2018 and is projected to be valued at $20.408 billion by 2026, with a CAGR of about 8.02%. Factors driving this trend include rising demand for computerized accounting services, and the need to automate processes relating to account payable, accounts receivable, payroll, and trial balance, etc. Increasing demand for "cloud-based accounting software" will be a key factor driving this trend.

INSURTECH SERVICES

• According to Ernst & Young (E&Y) GmbH, the German InsurTech (insurance technology) industry is gaining momentum and is driven by increased investment activities by a majority of large Germany-based insurers as well as strategic investors.
• The total value of disclosed funding volume as of 2018 quarter 1, reached €71 million and is majorly attributed to a "handful of large financing rounds " taking place recently.
• About 46% of InsurTech services offered by Fintechs to business organizations in Germany are for B2C clients. About 29% of InsurTech clients are B2B clients.
• A chart illustrating the growth of InsurTech services in Germany between 2013 and 2018 is accessible via this link.
• About 16% of InsurTech services reach organizations or individuals in the German health sector. Other sectors that benefit from the InsurTech services offered by Fintechs include life insurance sector (16%), business (14%).
• The Fintech, Wefox, formerly called FinanceFox, was established in 2014. It has raised about $158 million in funding.
• Wefox is an online platform which gives brokers, customers, and insurance companies the ability to manage their insurance services/products digitally. The company is focused on customer value and manages the entire insurance process from digitization to optimization and damage reporting.

RESEARCH STRATEGY

Findings

1. N26

• The company received $300,000,000 in Series C funding in January 2019.

2. Wefox

• Wefox received $125,000,000 in Series B funding in March 2019.
• The company operates two different online insurance platforms, One and Wefox. Both platforms attempt to streamline and partially automate the insurance industry by connecting brokers consumers and insureres directly.

3. Raisin

• In February 2019, Raisin announced a $114,000,000 Series D investment.
• Raisin allows users across Europe to move savings across the continent in an effort to get better insurance rates. It plans to expand to include the US.

4. Solarisbank

• Solaris raised 56,000,000 euros in Series B funding in August of 2018.
•  Solaris is a completely online banking platform.

5. Finleap

• Finleap received 41,000,000,000 euros in Series C funding in 2018.
• Finleap is a company builder that provides support to other fintech companies.

6. Smava

• Smava received $65,000,000 in funding in Series D investing in January 2018
•  Smava matches loans and financiers to customers.

7. Liqid

• The company received 33,000,000 euros in Series C in September 2018.
•  Liqid offers composable infrasturctre for other companies. Composable infrastructure allows for data and storage to be reconfigured constantly.

8. Mambu

• Mambu received 30,000,000 euros in Series C funding in February 2019.
•  Mambu is a Software-as-a-Service platform that provides lending and deposits for companies.

9. Clark

• In April 2019, Clark received $29,000,000 in Series B funding.
•  Clark is a robo-insurance adviser, that allows clients to look at their insurance portfolios and provides advice.

10. Scalable Capital

• Scalable Capital raised 25,000,0000 euros in Series C funding in August 2019.
• Scalable Capital is an investment platform that uses algorithms to predict the best investments for clients.

Overview of the climate for FinTech businesses in Germany

•  Germany is the fourth largest FinTech market in the world.
• FinTech funding in Germany recorded over 55% of YoY growth in 2018.
• Germany is home to around 700 companies in the FinTech sector, half of which were established during the last three years. "Geographically, most German FinTech companies are established in Berlin (228 companies as of September 2017), followed by Frankfurt and Munich (84 respectively), Hamburg (67), and major cities in North Rhine-Westphalia (53)."
• Celebrity FinTechs like N26 and wefox (formerly FinanceFox) raised $300 million and $120 million respectively, in the first quarter of 2019.
• The 2nd largest venture capital funding in Germany was received by FinTech companies in the country after e-commerce businesses.
• Venture capital investment in FinTech companies in Germany was estimated to be EUR 613 million as of 2017.
• According to calculations by Dusseldorf-based Barkow Consulting, investments in German FinTech companies reached EUR 1.13 billion in 2018.

Recent Initiatives

• Banks, insurance companies and other companies have established accelerator and incubator offices in order to establish new FinTech companies in the market.
• Among the top-10 largest banks in Germany, investments (41%) and collaborations (35%) have been the most preferred response models to date in response to the growing presence of FinTechs in the market.
• Several banks have also launched or are co-supporting various development programs for FinTechs, where FinTechs obtain expertise on a range of industry-specific topics (regulation, compliance, etc.) as well as funding support.

Government initiatives

• As part of the initiatives of Germany's Federal Ministry for Economic Affairs and Energy, a number of regional digital hubs were established in the country. Frankfurt and Berlin have one FinTech hub each.
• The Federal Financial Supervisory Authority (BaFin) is an autonomous public-law institution that brings the supervision of banks, financial service providers, insurance undertakings, and securities trading together under one roof as FinTech business models may require authorization from the Federal Financial Supervisory Authority due to diversity in their structure.

Germany as a leader for FinTech

• FinTechs in Germany benefit from solid public and private sector support initiatives including the availability of training programs for young FinTechs, including accelerator programs, hackathons, support through mentorship and incubators. The focus of these programs is mainly non-financial support.
• Main incubator (Commerzbank), Digital Factory (Deutsche Bank), Deutsche Börse Venture Network, Accelerator Frankfurt have been identified as key supporters of FinTechs through coaching.
• The progress of these programs embracing FinTech was identified between medium and high in 2017 in a report covering 'Germany FinTech Landscape' by EY.

MAJOR FORMS OF CORPORATIONS IN GERMANY

• Represents a separate legal entity from its founders. This is the most popular legal form and works well for most industries.
• Main requirement is €25,000 in starting capital.
• Simple structure designed for private companies only.
• The minimum number of shareholders is one.
• A registered office is required.
• A visit to Germany is required.

•  Smaller version of the GmbH.
• Minimum share capital of €1.
• Minimum number of shareholders and Directors is one.
• A registered office is required.
•  Visit to Germany is required.

• Appropriate for starting a business in Germany with more money and a large group.
• The minimum share capital for a Stock Corporation (AG) is €50,000.
• It is the standard corporate form for major public companies.
• The minimum number of shareholders is one.
• It is subject to heavy regulation as a listed company.

• Appropriate when starting a business in Germany with a partner.
• They can either be General Commercial Partnership (oHG) or limited by shares (KGaA) partnership.
•  Foreign investors tend to prefer limited-liability KG partnerships.
• Minimum of two partners, one of which can be a GmbH company
• Generally used in Germany for small and family-owned businesses.

PROCESS OF STARTING A NEW BUSINESS IN GERMANY

1. BUSINESS REGISTRATION

• Once one has a business name, they can check with the commercial register (Handelsregister) if the name they have chosen is already in use and with the local court (Amtsgericht) whether they’ve fulfilled all the naming requirements.

• The commercial register contains information about the name of the business, the name of the partner(s) and/or the personally liable partner(s), the managing director or the executive of corporations, the capital stock of companies, liability limitations of partners, the issuing and revoking of the power of attorney, the opening of insolvency proceedings, and the dissolving and ending of a company.
• The application for registration in the commercial register is electronically filed in publicly certified form by a notary to the responsible commercial register.
• Registration cost: The cost varies depending on the type of company. Costs incurred are made up of costs of the notarial certification and the fees charged by the district court for entry and publication in the Federal Gazette (Bundesanzeiger).  
• Limited Liability Company (GmbH): estimated total costs for the formation of a standard GmbH are approximately EUR 700 to EUR 800 plus fees for legal counsel if a lawyer is employed to draw up the articles of association.
• Mini GmbH: establishment costs for a Mini GmbH are reduced to a total of around EUR 300.
• The cost for registration and publication in the commercial register for a Stock Corporation AG is at least EUR 500.
• The cost for registration and publication in the commercial register for a partnership is currently EUR 250 minimum.
• Time Period:
• Time period required for the formation of a GmbH is two to three weeks which is the same time for mini GmbH.
• Establishing formalities for Stock Corporation and Partnership is moderately high, so it will take much time compared to GmbH and Mini Gmbh.

• Before starting their business operations, every business operator must inform the trades (or regulatory) office (Gewerbe- oder Ordnungsamt) of the town or local district in which the business operation is located.
• One may need special permits if they’re a liberal professional (doctor, chemist, architect, engineer, etc.), which they can find out from their respective chamber for liberal professions (such as the Architektenkammer or Steuerberaterkammer).
• For craftsmen (carpenter, glassblower, etc.), one needs to look into the master craftsman’s certificate (Meisterbrief) from the Chamber for Skilled Crafts (Handwerkskammer – HWK).
• Also, if your business requires good hygiene (food services, working with minors) you may need a health certificate from the Public Health Office (Gesundheitsamt). If you’re unsure whether you’ll need a permit, speak directly with the IHK.
• The trade office automatically sends a copy of the business registration to the responsible tax office (Finanzamt). This then sends a registration form to the company for tax registration purposes.

• Lastly, to register a business in Germany, one needs to visit the local finance office (Finanzamt) to fill out the tax questionnaire (Fragebogen zur steuerliche Erfassung).
• Corporations and partnerships will need to show copies of the articles of association, trade license, and entry in the commercial registry. (S1)

2. TAXES, HIRING, INSURANCES, AND BANKING

• With the help of a licensed accountant or bookkeeper, a business need to establish an opening balance sheet (Eröffnungsbilanz) and at the end of the year a report of accounts (Jahresabschluss) for current business financials (Betriebswirtschaftliche Auswertung – BWA), from where tax rates are calculated:
• VAT: When one registers, they choose between Soll- and Ist-Versteuerung. The first means one pays the VAT on invoices once they send them to customers and the second means one pays the VAT only once the customer actually pays the invoice.
• Income Tax: an income tax (Einkommensteuer) is calculated on your company profit. For small businesses, their income can be calculated based on an Einnahmenüberschussrechnung (EÜR), a simplified revenue and expenditure statement and are reported to the Responsible Tax Officer (Finanzamt).
• Corporation Tax: (Körperschaftsteuer) is computed on the global taxable income. One may also need to pay a 25% withholding tax (Kapitalertragssteuer) on dividend payments if they have a parent company and a 25% final withholding tax (Abgeltungssteuer) on profits distributed to private shareholders.
• Trade Tax: This is applied by the municipality to all commercial businesses (not civil) and varies between 7% and 17% depending on the local rate.

• Register the company with the Federal Employment Agency (Bundesagentur für Arbeit) to receive an 8-digit company number (Betriebsnummer) for payroll (Lohnabrechnung). This is required to draw up an employment contract and for social security, health insurance, nurse care insurance and unemployment insurance.
• The company will also need to calculate and withhold the income tax (Lohnsteuer) for employee based on their tax class, in addition to the church tax and solidarity surcharge tax (Solidaritätszuschlag).

• Company insurance coverage protects businesses from losses due to events that may occur during the normal course of business. There are many types of insurance for businesses including coverage for property damage, legal liability and employee-related risks. Some of the company insurances available in Germany are:
• Corporate liability insurance (Betriebs-Haftpflichtversicherung) – covers potential mistakes of your employees, problems with suppliers, etc.
• Professional liability insurance (Berufs-Haftpflichtversicherung) – this is important for freelancers and consultants, covers mistakes or bad advice with financial consequences.
• Business interruption insurance (Betriebs-Unterbrechungsversicherung) – covers wages, expenses and running costs in times without business income. 
• Occupational accident insurance (Berufsgenossenschaft) – covers accidents in and around the office and for employees while working.

• It will be used to process any ingoing (expense) or outgoing (revenue) invoices.
• That’s where the starting capital is located too.

• One of the main difficulties that people face in setting up a German limited liability company (GmbH) is in opening a bank account and the relevant know-your-customer (KYC) processes.

HELPFUL FINDINGS:

• Generally, those new to Germany can expect to encounter many rules and regulations and a low degree of flexibility and spontaneity which can result in slow progress when it comes to making decisions and an aversion to sudden changes which is considered challenging in setting up a business.

• Small businesses, civil partnerships (GbRs), freelancers and dependent branch offices do not have to be registered in the commercial register.
• As a freelancer or small business owner you can be exempt from the VAT if in your first year your profits were less than €17.500 and the following year they were under €50.000 (Kleinunternehmerregelung).

Overview:

• According to Bato Group, in the present time, there are more than 500 co-working spaces in Germany.

• In 2017, there were 5% of total office space rented within the seven largest German office markets.

• Berlin and Hamburg are in the European top ranks, with a market share of 10 % and 5 % respectively.

MAJOR CO-WORKING SPACE PROVIDERS IN GERMANY

WE WORK

• We Work has 17 co-working space locations in Germany.

• Locations are spread over in 5 cities: Berlin, Cologne, Frankfurt, Hamburg and, Munich.

• In addition to these locations, We Work has several locations in other countries such as the United States, Canada, China, Australia, and the United Kingdom.

REGUS

• Regus has more than 152 co-working space locations in Germany.

DESIGN OFFICES

• Design offices have 34 co-working space locations in Germany.

RENT24

• Rent24 has 24 co-working space locations in Germany.

MINDSPACE

• Mindspace has nine co-working space locations in Germany.

BETAHAUS

• Betahaus has three co-working space locations in Germany.

BEEHIVE

• Beehive has five co-working space locations in Germany.

IMPACT HUB

• Impact Hub has four co-working space locations in Germany.

• Impact Hub has co-working spaces located in Munich, Dresden, Berlin, and Essen.

SOCIAL IMPACT LABS

• Social Impact Labs has four co-working space locations in Germany.

• Social Impact Labs have co-working spaces located in Hamburg, Frankfurt, Leipzig, and Munich.

Research Strategy:

BUSINESS STATISTICS: GERMANY

• In 2016, the total number of enterprises in Germany operating in the non-financial business segment with 0-9 employees stood at 2,022,140 businesses.
• Alternatively, larger companies with more than 250 employees operating in the non-financial business segment stood at 11,762 companies.
• According to the Federal Ministry of Economic Affairs and Energy, about 99.6% of companies in Germany belong to the SMEs. Additionally, about 720,000 new businesses were registered in 2016.
• In 2016, the micro-businesses operating in the non-financial business segment had a workforce of 2,036,100 employees. Alternatively, small businesses and medium-sized businesses featured a workforce of 357,651 and 58,878 employees working in the non-financial business segment in Germany.

RESEARCH STRATEGY

Broad Data Search: Global Perspective

Business statistics sites

Data Search: Country and Regional Perspective

Triangulation

REVOLUT

• Revolut was founded in 2015 and is based in London. In 2017, they reported $15.67 million in revenue, and $17.31 in 2018. From 2016-2017, their revenue growth was 443%. They offer personal and business products. Revolut launched in Germany in 2017.
• Their market valuation is currently $1.7 billion, with $336.5 million in total funding over 12 rounds, with the last being March 27, 2019. They are a private company and considered a tech unicorn.
• Revolut has completed a total of 350 million transactions at a total value of $48.9 billion.
• Revolut states they have 7,000 new accounts opened daily.
• They have nearly 20,000 businesses as customers, along with 4.5 million customers total. In the UK, they have 1.6 million customers.
• Businesses may hold, receive, and exchange 29 currencies without charge.
• Revolut claims they are ten times cheaper than a bank.
• They have had significant reported losses.
• Their business customers have an Open API to integrate their Revolut account into their current workflow and stack.
• Revolut operates in Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Gibraltar, Greece, Hungary, Iceland, Ireland, Isle of Man, Italy, Jersey, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland and the United Kingdom.
• Their website may be viewed here.

N26

• N26 is a Berlin bank that operates in 20 countries in Europe. They have 2.5 million customers worldwide and were founded in 2013. They are a Late Stage Venture and have raised $682.2 million in funding over seven rounds. Their latest round was July 2019.
• N26 has a current market valuation of $3.5 billion.
• In 2017, they generated revenue of 11.24 million Euros which was a 2000% increase over 2016.
• In late 2018 they had two million customers. They currently have over 3.5 million. Their monthly transaction volume exceeds 1.5 billion Euros.
• N26 offers banking for freelancers and the self-employed.
• They operate in Germany, Austria, France, Italy, Spain, Portugal, Ireland, Greece, the Netherlands, Belgium, Luxembourg, Finland, Latvia, Estonia, Lithuania, Slovakia, and Slovenia.
• N26 is planning to expand to the US in 2019.
• Their website may be viewed here.

PENTA

• Penta is a digital bank that targets SMEs located in Germany. They were founded in 2017. They are a private company that strives to meet all the needs of a SME business.
• Penta has raised 17.2 million Euros over four funding rounds, with the latest being in August 2019.
• There are currently 7,500 German businesses that use Penta.
• Penta currently has a wait list with over 3,000 local businesses and boasts user numbers have increased over 900% in the last several months.
• Penta offers a community driven approach that has made them very popular. Over 68% of Penta's new customers are businesses that have switched from their existing bank to Penta.
• They offer multi-card support, which the older banks have struggled to deliver.
• Their website may be viewed here.

HOLVI

•  Holvi was founded in 2011 as a private company, and launched in Germany in 2016. They operate in Germany, Finland, and Austria. From 2017 to 2018 they saw year-on-year growth of 60 %.
• Holvi has raised 4.3 million Euros over six funding rounds. Their last round was in 2015.
• The majority, 85%, of their customers are freelancers.
• Holvi has over 150,000 micro businesses across Europe as customers.
• They describe themselves as "a simple one-stop-shop for small businesses to collect income, manage expense and get an understandable real-time view of their company finances. New Holvi accounts can be opened in minutes online and Holvi customers don’t need a separate bank account."
• Holvi was voted the "Hottest Startup in Helsinki".
•  E-Residents may business bank with Holvi.
• Their website may be viewed here.

FIDOR

• Fidor was founded in 2009, and is based in Munich. They are a private company that offers retail and business banking.
• They were founded in 2009, as a response to the banking crisis to re-establish lost confidence. One of the ways they do this is to let their customers participate in the decision-making processes of Fidor.
• In Germany, they have 100,000 clients, and 300,000 community members.
• In 2018, they had $29 million in revenue.
• Fidor has published a Fidor Bank Moneyfesto.
• Their website may be viewed here.

KONTIS

• Kontis was founded in 2016, in Berlin. They are a private company.
• They focus on freelancers.
• Kontis raised over two million Euros in funding over three rounds. Their last round was in 2018.
• Kontis states that their bank account can figure taxes in real time.
• Their website may be viewed here.

MARKET INFORMATION

• The global digital banking market is expected to grow at a CAGR of around 3.8% between 2019-2025.
• The German SME market is $3.6 million.
• If left unchecked, the digital "movers" could cause banks to forfeit between 5-15% of their interest and fee income over the next five years.
• Micro-enterprises occupy between 82-95% of the business space in Europe. In 2016, there were 30.6 million.
• The number of banks in Germany has dropped by 52% since 1995. There are currently 1,584 banks in Germany. The low interest rate regulations like Basel III have increased capital requirements and have put more pressure to consolidate.

RESEARCH STRATEGY