The term “New Mittelstand” brings together two worlds: startups on the one hand and small and medium-sized enterprises (SME) on the other. The new and novel meet the tried and tested. The declared goal: to prepare Germany’s successful SMEs for the future with new technologies, concepts, and business models.
What will it take for this symbiosis of startups and established SMEs to succeed? There are already many real-life examples of startups and SMEs collaborating successfully, whether as joint venture partners, in B2B relationships, or research alliances. The range of topics those arrangements cover is broad, from sustainability and digitalization to artificial intelligence. For example, traditional SMEs are already using AI chatbots such as ChatGPT or software solutions to work from home. In turn, startups deploy hardware developed by SMEs or leverage their experience and customer relationships.
At my own startup, Teylor, I am experiencing the New Mittelstand on a daily basis. Since 2019, we have been offering SMEs fast and unbureaucratic access to a wide range of financing products; loan applications can be submitted entirely online in just a few minutes. This has enabled us to successfully finance thousands of SMEs. Moreover, financial institutions, many of them mid-sized banks, use our Software-as-a-Service solutions to digitalize their lending processes. In many respects, Teylor is thus an example of the many benefits startups and SMEs stand to gain from collaboration.
That said, New Mittelstand can be challenging: Many startups struggle to understand the mindset and business practices of traditional SMEs, and they often lack industry experience. On the other hand, SMEs often cling to inefficient processes for too long and are unfamiliar with the startup culture. The challenge therefore for the New Mittelstand is to build bridges and facilitate win-win situations.
What does that mean in practical terms? Listening, understanding, and explaining allows decision-makers on both sides to lay a foundation of trust and spot the many opportunities to work together. After all, there are so many challenges startups and SMEs can solve in tandem. In this latest issue of Transfer magazine, we reveal the transformative potential of the New Mittelstand and chart a course into the future. I wish you an exciting read!
Patrick Stäuble (author)