Jump Start London Calling German Start-Ups

The London Stock Exchange and Deutsche Börse are competing head to head in the battle to serve fast-growing German companies. So far, the LSE is winning.
London's poised to help German start-ups.

Anthony Fletcher has a company and a goal he believes in. "There are so many places where we can put our business idea into practice," says the head of Graze, a British supplier of healthy office snacks. His problem is that he is not quite sure how to approach the expansion.

Mr. Fletcher hopes to find an answer in a funding program offered by the London Stock Exchange. The program, known as "Elite," is intended to help fast-growing companies by providing them with know-how and connections to experts and investors. Graze is one of the participants in the 24-month course.

The LSE now plans to expand the program and, in doing so, could preempt Deutsche Börse – the German stock exchange – which is planning a similar project.

"There are potentially thousands of companies in Europe that could benefit from Elite," Xavier Rolet, the LSE chief executive, said on Wednesday.

Mr. Rolet has also set his sights on Germany. He said the country was interesting not just for its size, but also for its large numbers of small and medium-sized companies, all of which are potential Elite participants.

Unless Deutsche Börse makes a move, German companies will go public in London or New York. Florian Nöll, Federal Association of German Startups

Deutsche Börse wants to serve young German startups too, but is not as far along as its London rivals. The German Stock Exchange refused a request by German lawmakers to create a special market segment for young growth companies, but has another strategy to support fast-growing companies.

An Internet platform will promote access to investors, Andreas Preuß, the deputy head of Deutsche Börse, said in late November. Mr. Preuß said the stock exchange was working "intensely" on the platform, which could also help companies prepare for initial public offerings.

Securing funding in the early phases is not the big problem for German start-ups. "Thanks to public funding in Germany, there is usually sufficient capital available for that," said Mr. Preuß. But what is missing, he added, is funding for the later growth phase.

More details on the new plan will likely be announced on December 18, when representatives of the German economics ministry, Deutsche Börse and start-ups meet to discuss support for young companies.

The London Stock Exhange launched its Elite program two years ago, initially in Italy, with the cooperation of Milan's SDA Bocconi business school. The LSE has also been promoting British companies since the spring of 2014 in a joint program with Imperial College in London.

More than 200 companies in Italy and Great Britain are now taking part in the LSE program.

It is still unclear which university the LSE will choose as its partner in Germany and the start date, but it plans to get things going in the next few months, an LSE spokeswoman said.

The German Start-ups Association welcomed the LSE and Deutsche Börse plans. Association head Florian Nöll said that there is nothing wrong with competition and he believed Deutsche Börse will get involved in a "special market segment or an index for young growth companies."

Time is of the essence, however. According to Mr. Nöll, "unless Deutsche Börse makes a move, German companies will go public in London or New York."



Elizabeth Atzler is a banking correspondent at Handelsblatt. Katharina Slodczyk reports from Handelsblatt's London bureau. To contact the authors: [email protected], [email protected].