Forget Berlin – now comes Buxtehude. Cities are not the only possible startup setting. Should your startup move to the countryside? Use this checklist to find out.
Have you ever thought about setting up a business in the country? Find out if it’s a good fit with this 8-point checklist. Getty Images / jacoblund, Piotr Jaczewski | Founder scene / Dominik Schmitt
“We can’t all sit in a co-working space in Berlin with a MacBook and a chai latte and invent the tenth dating app.” With this sentence, the founder of Nordwolle, Marco Schee, went viral in February 2021 . Schee’s company is based on Rügen – not exactly the classic startup hotspot. Here he has problems taking over a listed farm with his startup and complains about this in an NDR documentary. Schee’s startup produces clothing from the wool of the Pomeranian sheep that lives on Rügen. A business that can only work in the countryside, only on Rügen. Rooting on the island is the USP of the quick-tempered textile founder. But even if your product is not “necessarily” tied to a specific region, it may be worthwhile for your startup to move to deep Thuringia, Brandenburg or southern Lower Saxony instead of Berlin or Munich. Why?
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We have put together eight points that speak in favor of founding a startup in the country.
1. You want to save operating costs
The decision to start a business in the country can make sense, especially from a financial perspective. The additional financial leeway can mean a decisive advantage in the early years for startups that realize their business ideas without the pressure of city costs.
The lower costs are manifested in several areas: On the one hand, the cost of living, including housing, local amenities and leisure activities, is on average significantly lower in rural regions than in the city: according to the Federal Statistical Office Net rents in large cities are on average a third higher. In addition, the Rental prices for commercial properties in the countryside are often significantly cheaper. This includes both office space and production facilities (unless you choose a listed barn, see above). These savings can be critical for young companies that work with very limited budgets: Instead of investing in high operating costs, startups can invest their financial resources in product development, marketing and personnel – and advance their core business more efficiently.
2. Your company is remote-first
Since the Covid-19 pandemic, remote working, which no longer requires physical presence in an (urban) office, has become increasingly important. Rural areas offer an excellent basis for startups that pursue a remote-first concept. They can benefit from the lower cost of living in rural areas while employing employees across cities and serving customers nationwide. The prerequisite for this – and still not available everywhere in Germany – is a good internet connection.
3. You want to attract employees with fresh country air
However, a rural location can also be an incentive for employees who are attracted to the combination of a lower cost of living, more living space and a natural environment. This can help startups attract – and retain – talented employees who are looking for a better work-life balance. This was the experience of Maximilian Block, an early-stage investor based in Greifswald in northern Germany. “This is not show and shine, this is doing,” he said in an interview with Gründerszene 2022 about entrepreneurship beyond the big cities. He is convinced that it is easier to retain skilled workers far away from urban centers: “The identification is completely different,” he says. What counts is authenticity and recognition value. His advice: “Stay who you are, even from the region and with the identity you have created.” This would also apply to the staff.
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4. You are ready to found a startup specifically for the needs of the region
A key advantage of starting a business in rural areas is the opportunity to tap into undiscovered market niches that differ from urban markets. Startups that focus on sustainable agricultural technologies or regional organic food specialized, hoping for less competition and a strong market position in rural areas. Good market knowledge in order to precisely identify the needs and potential of a region and to offer tailor-made solutions is essential on the way there.
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5. … and want to escape the oversaturated markets in the cities
This results in an additional advantage: While the markets in Munich, Cologne or Berlin are often already saturated and the competition is more intense, rural regions promise less competitive pressure. In areas of mobility, local supply, telemedicine, agricultural services or craft products, it is easier for startups to find and fill a gap in the market. This reduced competitive pressure allows them to develop and test innovative solutions.
6. You want to benefit from local networks and shorter official channels
Access to the smaller, but often close-knit networks plays an important role in rural regions – both socially, politically and in the media. They make it easier to access important resources and can help promote the startup by making it known earlier than would be possible in a metropolis. In addition, the official channels to regional journalists and politicians are often shorter and more direct, which enables more effective communication and faster processes. In the best case scenario, this closeness can translate into stronger local media presence and political support.
The Seedhouse Accelerator team around managing director Florian Stöhr (back row, middle) wants to establish a regional ecosystem in southern Lower Saxony – and relies on a strong network. Seedhouse
The fact that rural regions can offer good networking opportunities is demonstrated by an area that already has a pompous Valley nickname: western Lower Saxony and northern North Rhine-Westphalia. Large corporations and medium-sized companies from agricultural systems technology and the food industry are located here. The region around Osnabrück is called “Agrotech Valley”. The student city has developed into a regional start-up center in recent years. First of all, the accelerator Seedhouse, which specializes in agricultural startups, aims to create a regional ecosystem. Very important: the network. “We can call anyone, from the Pope to Günther Jauch. Someone always knows someone,” says Seedhouse managing director Florian Stöhr.
7. You want to reap tax benefits
Another important point for founders making a location decision is trade tax. In many rural regions, trade tax rates are lower than in large cities. In some cases there can even be real competition between districts, who undercut each other with particularly low tax rates in order to attract business founders. This not only provides startups with financial relief, but also an incentive to establish themselves in these regions, which in the best case scenario can promote improved reinvestment of revenue and therefore faster growth.
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8. … and benefit from funding programs
Another positive factor can be regional support programs: many rural areas offer special incentives and aid for companies in order to strengthen economic development in the region. These programs can range from financial support, such as grants or low-cost loans, to advisory services and networking events. The state of Thuringia, for example, regularly organizes events through its innovation and research initiative STIFT (Foundation for Technology, Innovation and Research Thuringia). like the Thuringian Investor Days to bring the community together with well-known investors. Another example: getting participants in the Seedhouse Accelerator program in Lower Saxony A flat-rate grant of 10,000 euros from the state for her startup.