Diversity & Impact in the Berlin Startup Ecosystem

The "Diversity & Impact Report" (PDF in German) was prepared for the Senate Department for Economics, Energy, and Public Enterprises (Senatsverwaltung für Wirtschaft, Energie und Betriebe). The report provides an overview of diversity and impact topics based on data and feedback from companies, organizations, and individuals, and showcases best practice examples. After the release of this report in November 2023 (press release in German), there have been requests for an English version. Therefore, here are the key contents translated into English.

The Berlin startup ecosystem is rapidly evolving. According to the latest 'Berlin Startup Employment 2023' report, Berlin startups are creating 73,000 jobs in Berlin and another 76,000 jobs outside of Berlin. The Berlin state government supports this development in various ways. Recently, a startup agenda was adopted until the year 2026 (PDF in German: "Startup Agenda 2022-2026) to position Berlin as a model for sustainable economic and technological development. Startups, innovation, and sustainability are being considered together. Many Berlin startups have pledged not only to be innovative but to positively impact the world. Others prioritize the protection and promotion of diversity. Often, both go hand in hand. Berlin attracts talent from around the world who value both. The common thread between 'Diversity' and 'Impact' is Sensemaking. The Diversity and Impact Report provides all interested parties with information to get started, with more than 80 links to further sources. Thanks to everyone who supported us in the research and selection process and to those who contributed their ideas and perspectives with a quote!

Executive Summary

Diversity & Impact are part of the DNA of the Berlin startup ecosystem

In March 2022, the IFSE published the first Startup Report Berlin for the years 2020 and 2021. Data from the Startup Map Berlin was used for this purpose. One insight was that Berlin attracts talents who are enthusiastic about the topics of Impact and Diversity. Both topics offer many points of intersection and opportunities for the further development of the startup ecosystem in Berlin. The state of Berlin aims to provide an excellent environment for founding and growing Impact startups, thereby strengthening the sustainability and future viability of the Berlin economy. Additionally, the state of Berlin seeks to promote diversity in the startup ecosystem, especially Female Entrepreneurship.

Diversity is crucial for entrepreneurial success

In an article for the Harvard Business Review in 1996, David A. Thomas and Robin J. Ely emphasize that Diversity Management goes beyond fairness and equality, helping companies reach customer groups, develop suitable products, and promote a culture of diversity. In Germany, the "Charta der Vielfalt" has been supporting these efforts since 2006, with over 4,800 companies and 14.9 million employees committed to actively promoting diversity. The initiative emphasizes the importance of intersectionality and considers diverse dimensions of diversity.

Female Entrepreneurship

In our analysis of 1,747 startups from the Berlin Startup Map using data from Dealroom, it is evident that only 14% of the founding members are women. Among the 3,265 founders, there are 453 women and 2,812 men. Only about 7% of the startups were founded exclusively by women, while approximately 25% of the startups have at least one female founder. These numbers illustrate the underrepresentation of women in the Berlin startup ecosystem, with the exact distribution being only approximately determinable due to the partial lack of gender information.

The Female Founders Monitor 2022 (PDF in German) reports that 20% of startups in Germany were founded by women, indicating a slight increase but still at a low level. Diversity within teams is increasing only slowly. Further initiatives are necessary for better compatibility of family and entrepreneurship, as female founders are often disadvantaged by childcare responsibilities. Women-led startups frequently focus on consumer goods, food, as well as medical and education-related sectors. An imbalance exists in funding, with female-led teams receiving significantly less capital than male-led teams.

The initiative #startupdiversity is therefore calling for more female investors and greater permeability in networks. The initiative makes four demands, including better transparency regarding gender distribution in venture capital funds, a women's quota in the leadership teams of state funds, disclosure of the proportion of women in leadership positions at larger startups, and the promotion of computer science and entrepreneurship in educational institutions as well as improving the compatibility of career and family. The report includes additional links from initiatives and institutions.

LGBTQI*

LGBTQI* individuals in Berlin, including those in the startup scene, continue to experience bullying, discrimination, and marginalization. Stuart Bruce Cameron , founder of the UHLALA Group , emphasizes that the tech world is not as open as often assumed. Studies show that approximately 30% of LGBTQI* individuals experience workplace discrimination, one-third are not out to colleagues or are only partially out, and they are more likely to suffer from depression, burnout, and anxiety disorders. Despite these challenges, LGBTQI* individuals are often highly educated and enrich the work environment.

Migrant Founders

Similarly, individuals with a migrant background as well as Black people and People of Color (BIPOC - Black, Indigenous, People of Color) experience disadvantages. The larger group in Germany are the "Migrant Founders," with overlaps existing. The Migrant Founders Monitor (PDF in German) by the Startup Association and Friedrich-Naumann-Stiftung für die Freiheit recently shed light on the potentials and challenges. 22% of German startups were founded by individuals with a migrant background, with 59% being born abroad. Berlin plays a special role in this regard, as 21% of migrant founders in Germany live here. These founders are often highly educated, with an academic proportion of 91%. They are internationally oriented but encounter difficulties in raising capital and accessing networks. Despite these challenges, there are successful exceptions such as Omio and BioNTech SE , which demonstrate that success is possible.

Founderland is an initiative specifically targeting BPoC (Black & People of Color) female founders. The goal is to support these women in building their startups, connect them with investors, and provide them with greater visibility and access. Global VC funding for female founders is declining, with Black women receiving only a fraction of it. Founderland aims to reverse this trend through networking and promoting diverse teams, advocating for an intersectional approach that addresses various inequalities. In late January 2023, Founderland released the Rise & Thrive Report, an intersectional analysis of the situation of BPoC female founders and their experiences with discrimination, fundraising, and glass ceilings.

Inclusion for People with Disabilities

In Germany, there are approximately 7.8 million severely disabled people, of whom 57% are of working age and either employed or seeking employment. Companies with more than 20 employees are required to pay a compensation levy if less than 5% of their workforce consists of severely disabled individuals. The Inklupreneur project aims to promote inclusion in the startup scene by collaborating with up to 100 Berlin-based companies to develop and implement inclusion models.

Discrimination by AI

AI and automated decision-making are becoming increasingly important for startups, with around 400 in Berlin developing or using AI. However, biases in AI reflect the lack of diversity in development teams, often resulting in discrimination, such as facial recognition software struggling with women and non-white individuals. There's a call for more diverse and interdisciplinary teams in AI development to ensure inclusivity, social, ecological, and economic sustainability in AI applications, addressing significant global challenges and ensuring AI benefits future generations sustainably. The "SustAIn" project advocates for AI development that considers social, ecological, and economic aspects to meet the needs of future generations. Dr. Anne Mollen emphasizes the importance of diverse teams and ethical standards in AI development and, together with her team, has developed over 40 indicators that organizations should be guided by if they want to develop and use socially, ecologically and economically sustainable AI.

Berlin - City of Impact Startups

Berlin promotes impact startups that aim to solve social problems and have a positive impact. The city strives to be a leading center for socio-ecological transformation by supporting startups with sustainable innovations. This includes creating a favorable start-up and growth environment, promoting events for impact start-ups, networking with national and international partners, integrating impact topics into entrepreneurship education and making public funding opportunities accessible to the impact sector.

According to the Startup Association, three quarters of startups consider a positive social or ecological impact to be very important, with ESG indicators (environment, social, governance) playing an increasingly important role. Impact startups go one step further and explicitly strive to bring about positive change with their technologies, products or services and are often guided by the UN's 17 Sustainable Development Goals. There are around 240 such start-ups in Berlin. These impact startups create over 6,900 local jobs in Berlin, with growth of 18% since January 2022, and outside of Berlin they create around 10,500 jobs. Of around 470 founders, 25% are female, which puts this rate in the impact sector above the average of 14%.

The distribution of Berlin's impact startups across the Sustainable Development Goals (SDGs) shows priorities in areas such as "Sustainable cities and communities", "Affordable and clean energy", "Good health and well-being" and "Responsible consumption and production". These startups create jobs and contribute to global sustainability goals by offering solutions in critical areas such as climate protection, gender equality and health. It is worth noting that many startups are aligned with multiple SDGs, reflecting the complexity and interconnectedness of the sustainability goals. In the report, we present a few subjectively selected examples of impact startups - among others: Plan A Sanity Group Cara Care DiaMonTech AG Clue inne HPS Home Power Solutions AG BuildingMinds Xayn ecoworks Formo Lite&Fog

Social Economy Berlin

Berlin is characterized by a vibrant social economy, with a high proportion of social enterprises, particularly in the areas of education, information/ communication and healthcare. These companies place social challenges at the center of their activities. "Social Economy Berlin" promotes better framework conditions for social enterprises and is supported by various networks and the Senate Department. SEND, Social Entrepreneurship Netzwerk Deutschland e.V., which acts as a voice for social enterprises in Germany, emphasizes the use of entrepreneurial means to solve social problems, with transparency and control as core values.

Steward-Ownership

Einhorn, a Berlin-based company, practices steward-ownership and emphasizes self-determination, sustainability, and transparency. It is characterized by flat hierarchies, flexible working conditions, and reinvestment of profits into sustainable projects. As part of the Purpose movement, which also includes Ecosia, Einhorn is not for sale and "belongs to itself." The concept of steward-ownership aims to secure company independence and values orientation to address social and ecological crises through entrepreneurial innovations. There are over 200 such companies in Germany.

Impact startups, social startups, or purpose startups - and many more - share the intention of making a positive impact. The goals, approaches, and values are as diverse as the terms used. Goals beyond profit maximization set the tone for collaboration within the company and challenge ownership structures. Here, a circle is closed with diversity management: diversity is essential.

Thanks to

Senatsverwaltung für Wirtschaft, Energie und Betriebe Norbert Herrmann Dealroom.co Charta der Vielfalt e.V. Startup-Verband Prof. Dr. Heike Marita H?lzner Katja Brunner Fabiola Hochkirchen Bitkom Projekt Zukunft Berlin Founderland Deborah Choi Inklupreneur Nils Dreyer AlgorithmWatch Anne Mollen Social Economy Berlin Social Entrepreneurship Netzwerk Deutschland e.V. Afra Gloria Müller einhorn products GmbH Waldemar Zeiler Markus W?rner Berlin Partner für Wirtschaft und Technologie GmbH Marcia Schranner and many others, even if not specifically mentioned.