[rayiner]

The goal of having capital is if you order a bunch of Aereon chairs and fail to pay, or your delivery driver runs over someone, these folks have some hold of collecting because by law they can't come after you personally. $25k is an arbitrary number because it can't be anything but arbitrary in this situation.

[davidw]

Countries like the US, France and UK get by just fine without this requirement. The arbitrariness of the number is an indication that it's a bad idea: the number is too low to guarantee compensation in many situations, and adds another obstacle for would-be entrepreneurs, especially those who do not come from a well-to-do background.

Far better might be some transparency requirements.

[Xylakant]

Take the standard UG (haftungsbeschränkt) if you don't have the capital. There the base capital requirement is 1 Euro. You can even found a GbR which is not a limitied liability company but serves quite well in most standard cases.

In any case, the number is not too low to guarantee compensation: The base capital of the company is public. Every business person in Germany knows that number. So if you're trading with a fresh GmbH you can safely assume that at least 25k were available at some point. Excluding plain fraud, you can be pretty sure that at least bills in a given range can be paid from that capital. You'd have a second look if they try to order something which goes beyond their base capital. Transparency requirements don't help much with fresh companies since there is now history to judge from.