Salman Ulla from Merus Capital says COVID-19 highlights why Germany is an attractive investment destination
Can coronavirus crisis and how different countries reacted to make Silicon Valley venture capitalists more optimistic about European startups? This is a thesis put forward by Salman Ulla, co-founder and managing director Merus Capital,
Because COVID-19 is distributed worldwide, he claims that countries with national health care — along with fiscal and monetary policies that combine citizens’ interests with corporate interests — are better placed to fight the pandemic.
More broadly, investors prefer to invest in stable and sustainable economies, and sustainability depends on the ability of governments to respond to the crisis, not to mention such an unprecedented scale. For investors, the strength of national infrastructure and political institutions in many European countries is a pure positive – and a sharp contrast to Trump’s US.
Germany, in which Merus has already made several investments, is cited as an example of a European country that has become more attractive to investors in Silicon Valley in recent years. Not only is the launch cost in Germany lower, but Ulla claims that there has been a “cultural shift” among young people who now see startups as a viable career path, while the coronavirus crisis – and the reaction of the German government – make ecosystems such Berlin and Munich are even more attractive.
“Your dollar in Europe goes much further, rents are lower, in fact, everyone gets free medical care,” Ulla said during the conversation. “And the level of education and experience in the field of computer science, in particular, is neither better nor worse than in the US, and I think that the pandemic only reinforced this.”
In times of such uncertainty and the economic shock associated with this, Ulla notes that in European countries such as Germany, citizens are not concerned about the personal cost of medical care. He also points out how German Finance Minister Olaf Scholz promised unlimited credit for enterprises affected by the pandemic, along with the expansion of his short-term work scheme, which provides support to companies that are forced to reduce the working hours of their employees.