Why Germany's Startup Factories Deserve Silicon Valley's Attention

By Philipp Herrmann, Co-founder of BRYCK and Managing Director of BRYCK Startup Alliance. This is an Op-Ed on Operators' Stack, Menlo Times.

Europe has never lacked the raw material for DeepTech. It has world-class universities, deep engineering benches, and a research output that rivals the world's best. What it has lacked is the machinery to turn scientific breakthroughs into companies that can compete on a global stage. That gap between scientific excellence and commercial scale remains Europe's defining innovation challenge, and it is why Germany's newest bet, a network of ten publicly backed "Startup Factories", awarded by the German Federal Ministry of Economy in 2025, deserves attention from investors around the world.

My team and I run one of the ten: the BRYCK Startup Alliance in Germany's Ruhr region, a joint venture of the RAG Foundation, the University Alliance Ruhr, Initiativkreis Ruhr – a network of more than 70 leading companies and institutions – and the innovation hub BRYCK. A year in, here is my honest read: building a DeepTech company takes more than funding or research excellence. It takes an integrated system in which scientific talent, entrepreneurial support, industrial partners and capital reinforce one another. Get that system right, and our former coal-and-steel heartland in West Germany can once again become an engine of industrial transformation  – this time through DeepTech innovation.

Why Research Alone Doesn't Produce Companies.

Strong research ecosystems do not automatically produce successful startups, and pretending otherwise is the single biggest mistake I see. A postdoc with a promising discovery is, by training, not a founder. There is no product, no customer, and often no company yet. That gap, the few months before a research finding becomes a business, is the riskiest and least fundable moment in the entire journey. It is also where much of Europe's DeepTech potential has historically been lost. 

That is exactly why BRYCK exists. Since our official launch, we have supported more than 60 teams and startups across the earliest stages of the founder journey from company formation to early growth. Our first accelerator cohort alone brought together 23 teams from six countries working across energy, chemistry, materials, proptech and more. We complement that support with access to a dedicated €10 million pre-seed fund, investing in selected startups emerging from our ecosystem.  The lesson for anyone building or funding a DeepTech pipeline: infrastructure, mentorship and capital have to meet founders early on.

Why Place Still Matters.

The second lesson is that DeepTech scales locally before it scales globally. Proximity between universities, industrial companies, investors and founders is the number one mechanism by which knowledge, pilots and capital actually move. A founder developing a new water technology needs more than a laboratory. They need early validation from industry experts to better understand real use cases and B2B customer needs. That is why our teams work closely with corporate partners in our innovation clusters, where we systematically create pathways from early industry feedback to pilot projects. This helps startups build the relevance, credibility, and traction they need to grow and raise capital. 

Germany's Startup Factory strategy applies this same logic at national scale: ten regions, each built around a distinct industrial and research strength, competing and collaborating at once. The ambition is to deliberately create the conditions that made Silicon Valley successful: concentrate talent, capital and industry demand in the same place long enough to create a self-reinforcing innovation engine. Whether that approach succeeds will ultimately be measured by one outcome above all others: how many German and international founders choose to build here, and stay.

What Public Money Can And Cannot Do.

Public funding is doing real work here. It helps build structures that markets alone are unlikely to create, reduces the early-stage risk that keeps private capital on the sidelines, and creates incentives for universities, industry and investors to work together from the outset.  

What public funding cannot do is replace private capital, industry adoption or founder ambition. And it should not try to. The hardest test for European DeepTech remains growth-stage financing, not seed. European DeepTech investment hit a record level in 2025, yet by most industry estimates the region's annual DeepTech funding gap runs into the billions, concentrated almost entirely at the growth stage, with the majority of that late-stage capital still coming from outside Europe. Ten well-funded regional factories cannot fix that on their own.

The Opportunity For Global Capital.

For now, the growing pipeline of investable DeepTech companies creates a unique opportunity especially for US investors, who have both the most to gain and the most to offer. For them, it means early access to a category of companies that is difficult to build in a garage: energy systems, advanced materials, water technologies and secure digital infrastructure. These technologies require factories, permits and industrial customers, making industrial regions like the Ruhr uniquely positioned to produce them.

Europe's competitive advantage was never speed to market; it is depth: world-class research, engineering excellence and industrial customers capable of validating new technologies long before they reach commercial scale. The next step is ensuring that global growth capital follows these companies beyond the seed stage instead of waiting for them to relocate. In the long run, however, Europe must build the growth capital needed to accelerate and scale its own DeepTech champions.

The Real Test.

DeepTech leadership will not come from research excellence alone, in Germany or anywhere else. It will come from ecosystems that connect science, entrepreneurship, industry and capital. That is exactly what Germany's Startup Factories are designed to do. Whether they succeed, however, will not be judged by ambition, but by outcomes: follow-on financing, commercial partnerships, national and international founders who choose to build – and stay. Germany is running that experiment in public, at national scale, right now. For investors and ecosystem builders watching from outside, the smart move is not to wait for the results, but to help produce them.

About The Author.

Philipp Herrmann is Co-Founder and Managing Director of BRYCK, a leading innovation hub for deeptech start-ups. A seasoned entrepreneur and investor, he previously founded and scaled digital consultancy etventure, later sold to EY, and gained international experience at Stanford University. At BRYCK, he focuses on building high-impact startup ecosystems across sectors such as energy, water, proptech and chemicals, fostering collaboration between business, academia, and government.