The fear of selling out German innovations and technologies is back. It was recently fueled by the takeover of Viessmann’s heating business by the US company Carrier. The call for more legislative control follows almost reflexively. However, it is not the politicians in Berlin who can really ensure that innovative technologies remain in Germany, but the board members and managing directors of German companies.

It remains to be seen whether the heat pump market will actually experience a scenario similar to that of the German solar industry just over ten years ago. Another development – which has been ongoing for years – could be far more serious for the future of the country than the sale of Viessmann’s heating business: More and more German start-ups are being sold abroad.

According to a survey by EY, foreign corporations and investors were on the buyer’s side in two-thirds of M&A deals in the German start-up sector. In absolute terms, this means that 136 of the 203 emerging growth companies sold last year now have a foreign owner. This trend has accelerated over the past few years: In 2019, German buyers still accounted for 52 percent of acquisitions, according to EY.

However, the idea of legislators putting a stop to this development falls short. We already have a number of laws and regulations (most notably the Foreign Trade and Payments Ordinance) that apply in this area.

Although Germany now has an active ecosystem of funds and other investment companies for young growth companies, it will take several more years to reach the same level of maturity as the United States and generate comparable funding volumes for later-stage companies.

Instead, German companies need to be more open to technology and willing to take risks in the boardrooms and management floors – especially in the M&A departments – when it comes to investing in and acquiring start-ups. If German corporations and large medium-sized companies were more active as buyers, not only would the outflow of technology and know-how be stemmed, but the companies themselves would become even more innovative and thus more competitive on the international market.

An excellent way to get a good overview of the now colorful and multi-faceted start-up scene in Germany, while identifying potential takeover candidates at an early stage, is to become active as a corporate venture capital investor. This would have the positive side effect of at least partially closing the still glaringly large funding gap between German start-ups and their international peers – especially in the U.S.

One example of how this can work is Viessmann, which plans to invest most of the €12 billion from the Carrier deal in its own business activities, including investments and acquisitions. The company has also co-founded the platform “Maschinenraum”, which aims to bring together medium-sized companies and start-ups. No law or decree will be more effective in preventing the sellout of German innovations.