[blumentopf]

Tell HN:

I participated in a German Government startup program in 2004/2005 called EXIST-SEED (nowadays called EXIST Gründerstipendium). I wouldn't recommend this to anyone. The funding I got was relatively modest (35 kEUR in my case -- as a consultant I now earn more than that within 4 months) and I was drowned in bureaucracy. To this very day, I am arguing with the German IRS because they do not want to treat a failed startup as a business and thus refuse to deduct the expenses I had. I literally ended up spending more time with bureaucracy than doing real work.

If you compare the modest startup funding provided by the federal government to the amount spent on the German cash-for-clunkers program in 2009 ("Abwrackprämie"), which was 5 billion Euro, you get an idea what the government's priorities really are: Firstly big (automotive) corporations, then a lot of nothing, then the Mittelstand, again a lot of nothing, and then as an also-ran the startup scene.

You're ultimately fighting an uphill battle as a founder in Germany: A tiny private VC scene, meager support from the government and a mind-boggling bureaucracy.

I don't see this changing so I drew the frustrating conclusion to become a consultant fleecing fucking big corps.

[tdr]

+1 to confirm the bureaucracy around governmental/European funding: I lost 6 months on preparations for them and finally quit.

If I would have continued (and be accepted) I would have lost another 3-12 months until signing the contract. After that I'd be caught in at least 2 waves of unexpected monitoring and re-verification (which ultimately means not receiving the money in time from the state, all while I'd still have to pay my taxes, employees and suppliers according to the contract)

[pgeorgi]

And then there's the other issue that a failed founder in Germany is pariah.

From reading here and elsewhere, in the US you seem to get a reasonable chance (and maybe even some recognition) for having tried to start a company (and managed to keep it alive for some time).

Here, you failed, so you will fail, so why should anyone employ you?

[route66]

In a (possibly flawed) attempt to cheer you up: be aware that you basically say

- failing is frowned upon in Germany

- I do not want to run that risk

- so I will not try to start a company

Thereby effectively continuing the mantra "do nothing you could fail in".

I think that entrepreneurship has got a lot to do with "acting in spite of" and would not assume the situation in the US (I don't know personally) to be like there are happy parties where people are celebrating crashed businesses...

[stdbrouw]

Definitely agree. Belgium has a similar culture to Germany and despite mucking around quite a bit, none of my friends or family has ever made a disparaging remark about my entrepreneurial vagabondry. They probably think it's weird for me not to just go work for BigCorp, and it's not like I get a ton of support from them, but they do try to be encouraging even in the face of failure and they certainly don't frown upon it.

There's probably a kernel of truth to the idea that Americans are more entrepreneurial and less judgmental than your average European, but the idea that, in Europe, failure turns you into a pariah seems like a nasty myth that becomes real simply through repeated mentions.

[zerostar07]

This comes up often. Can you elaborate on how one becomes a pariah after failing a tech startup? And how does it make it impossible to get funding again? Is it because the banks will not give you loans due to bad credit or sth?

[derda]

Do you mind sharing any details, especially about the issues with the Finanzamt? As someone who considers a startup in .de I fear issues like that.

[blumentopf]

So in my case, the Finanzamt argues that what I did for the startup does not fulfill the definition of a "gewerbliche Tätigkeit" and consequently I can't deduct the "Vorsteuer" of my expenses. (As a business you get the VAT you paid on expenses back from the Finanzamt, which is called Vorsteuer.)

Download the Umsatzsteueranwendungserlass and go to page 63 of that PDF (section 2.3. "Gewerbliche oder berufliche Tätigkeit") to find a list of things that indicate whether you're having a business or not:

http://www.bundesfinanzministerium.de/nn_112540/DE/Wirtschaf...

In theory, if you fulfill the definition in that PDF, you're on the safe side. In practice however, the Finanzamt often tries to fleece you by simply making a claim that something can't be deducted, shifting the burden of proof to you. My particular case is still in dispute, I have an appeal (Einspruch) running against their decision. Most likely they'll lose, but they try to fleece people nevertheless because they figure that people will just pay and not spare the time to counter their evil tricks. If you do decide to shoot back, you have to be a German native speaker so you can read the laws and you should have some experience with the tax system. Alternatively, get a Steuerberater but be prepared to waste more money on your Steuerberater than what you would otherwise have paid for the Finanzamt's tricks.

One final word of warning: If your startup fails and you wind down the company, be prepared that the Finanzamt will conduct a detailed examination of the tax declaration of the past 3 years (Betriebsprüfung/Außenprüfung). This can drag on for several years because they're pretty slow. Apparently they routinely do this whenever a company is shut down.

[Uchikoma]

Amen (as someone did a startup in Germany and my wife currently founded one).