German Unemployment Startup Grants | Hacker News Reader

German Unemployment Startup Grants

dailykos.com

The program is not designed to create profitable businesses, it's designed to get the unemployed doing small scale businesses that will support them and make then un-unemployed.

The article makes it sound like the government is investing in startups - that's not really the case.

However, a positive thing I find is that this is second or third iteration of a similar concept that Germany has been trying, and each iteration is fixing the practical problems from the previous.

This system would not work in any way in the U.S, because there is no alternative social system. In Germany, you can choose this route, but you can choose other routes that get you also government money if you are unemployed. So there is no pressure to select this method - unless you want to start a business.

If something like this were introduced in the U.S, seeing as there is no social system or an alternative way to get money if you're broke, everyone would flood this system trying to cart off as much money as they could.

Such a system can only work when there are several other social safety nets - otherwise the system would be heavily scammed.

> The program is not designed to create profitable businesses, it's designed to get the unemployed doing small scale businesses that will support them and make then un-unemployed.

I both agree and disagree with this: a business that feeds one man and his family is profitable and is also a success.

I've seen it in action personally: My father went through this program about 7 years ago and is now independent, pays substantial taxes and is therefore a 100% success in terms of what this program seeks to accomplish. I am certain that every cent spent on getting him started has since been recouped.

A big VC style payoff cannot be the goal, because the government does not take a stake in the business. Instead they're looking to create long-term stable livelihoods.

The U.S. does have a similar program, the Self-Employment Assistance Program: http://www.workforcesecurity.doleta.gov/unemploy/self.asp

It's a Federal program, but the states have to implement it. Only Delaware, Maine, Maryland, New Jersey, New York, Oregon and Pennsylvania do. In short, if you're on unemployment and you qualify (they have some calculations that determine whether they think you're likely to exhaust primary unemployment anyways) then you can retain your unemployment benefit while starting a company, instead of looking for jobs.

One of my co-founders and I were on this after our last employer went under, and it helped a lot, keeping us focused on building the business instead of taking consulting work to pay the rent.

Australia is running something similar, called the New Enterprise Incentive Scheme. http://www.deewr.gov.au/Employment/JSA/EmploymentServices/Pa...

I know two people who have participated, a couple who successfully started a designer art/craft business (ala Etsy) both online and by touring regional markets. Another is a documentary film-maker, although she got a good job offer halfway through and did not complete the program.

I don't know anyone doing tech innovation oriented startups through the program, but I expect someone would be. Apparently the 'small business training' they offer is pretty basic and easy, but it does force you to do some things like write an acceptable business plan.

I'm involved in a similar scheme in NZ, though ours isn't nearly as well supported. I hold a music degree so am eligible for a thing called Pathway to Arts and Cultural Employment. Basically it's the Unemployment Benefit made less annoying and "get-a-job-like" and more positive, "sort-yourself-out-then-go-do-it"ish.

It's been great for me this year. After graduating uni the jobmarket for my other degree was beyond uninspiring (Marketing and Comms, double degrees are quite common here), so having had a few friends go through the program I decided to look into it. I also met some guys from a local tech startup community who provided me, free of charge, with an office and internet.

It's been great. I will never, ever regret this choice. I'm about to launch a start-up (admittedly, this is not my govt. sanctioned business, though they do know about it - the scheme is more designed to help you survive as a contractor/small business operator) and am now set up and comfortable to go and earn money as both a contractor and a businessman. I'm also encouraging all my friends who are eligible to try and do this instead of finding a job. I'm now smarter, more savvy and far more useful to society and myself than if I'd spent a year in a boring entry-level job.

These types of schemes are great for people like myself who get bored easily and always need to be challenged with learning new stuff, however my experience would not have been the same had I not also been involved with the startup group. I think for them to work well they need to be deeply connected to business groups like this, otherwise you're just doing it by yourself and likely to lose motivation. I guess it's really the ultimate private/public deal in someways. The public sector is very good at dispensing money to support the welfare of its people, but not very good at teaching them how to be good business people. If you can create a combination of this then schemes like this should be a cheap win for societies looking to produce a more entrepreneurial and confident population.

I just started out as an iPhone developer and have been on that program for a month now. In addition to the startup money, you are also entitled to an advisor/coach to help you start the business (up to 4000Euros, you pay 10%, they pay 90%). The money you get depends on the salary you received prior to your unemployment (60% of net income). It doesn't make you rich, but greatly helps to take out the risk in the first year. Don't know whether I would have had the guts to leave my IBM consulting job if there wasn't this option.

Canada has a similar program called the self-employment benefit. The requirement for application is to have been in receipt of employment insurance benefits in the previous 36 months.

To get in, you have to meet with a case manager and formulate an application which includes a 'business concept' document (kind of like a very short business plan).

I'm in the program right now and it's been pretty good so far. They provide a living wage and I get to work on my business. Part of the program involves attending workshops, which are pretty helpful if you don't have much of a business background.

The Gründerzuschuss is only for people who live of the governments unemployment insurance (ALG I). You get it for 6 months (if you've been employed for one year) up to 12 months (if you've been employed for two years). And there still must be three months of insurance left to apply for it.

If you don't get that insurance anymore, you get about €364 per month plus rent and health insurance (ALG II). Then, you can still try to start your own business but you only get some extra pocket money if you can be expected to make a living within 6 months (ha-ha). If you don't take the pocket money, you have 12 months until you have too look for employment again. Also, you cannot keep the money you earn for investments. About 90% of those attemps fail. Honestly, I cannot believe that the German government wants us to be independent, merely out of the statistics for a while.

Oh, by the way: if they put you on anything that takes more than 14 hours a week (like some €1/h job or some useless course) you're not officially unemployed. That's how they managed to come up with those incredible statistics.

> The German government expects that 20 to 30 percent of these businesses will fail.

Wow, a 70-80% success rate looks very impressive to me!

I think that's probably doable if you're just looking for a business to support a mediocre salary for a person or two. Of course getting a Google/Facebook/whatever out of something like this was have just as bad of odds as any other method.

Despite these kind of programs in Germany, but also in the Netherlands (although with different conditions), the startup culture in the US seems much, much stronger than in Europe. Why?

Sorry to derail, but can you give some more info about the Dutch programs? A google-able name would be enough. Cheers,

$25,000 x 1,000,000 unemployed = $2,500,000,000.

Where's the U.S. supposed to get that kind of money, just print it out of thin air? Yeah, right.

> The U.S. spends about $3.6 billion a month in Afghanistan, according to data provided by the Congressional Research Service recently.

http://thehill.com/blogs/blog-briefing-room/news/63121-crs-c...

$25,000,000,000 actually. And it's still chump change for the US federal budget, considering the effect it could have and what else the US government spends that kind of money on.

Plus, even if you count failures, each newly started business probably creates on average more than one additional job.

How do they decide who gets the grant?

There are several conditions:

- The applicant must be unemployed (he or she can’t switch directly from a job to self-employment). If the applicant quit her or his job they must wait twelve weeks before applying.

- The applicant must still be able to receive unemployment benefits for at least ninety days at the start of the self employment.

- The planned activity must be independent and full-time (at least 15h a week, other part time jobs are permitted).

- Receiving a grant again is only possible two years after the last grant ended. Anyone older than 65 won’t receive a grant.

- A “competent person or organization” has to confirm that the business plan is sound (e.g. lawyers, tax accountants, corporate consultants, the chamber of commerce, professional associations, incubators, …).

- The applicant has to demonstrate her or his personal qualification to the unemployment agency. If the agency doubts the qualification they may require additional training.

The list was adopted from the respective article in the German Wikipedia: http://de.wikipedia.org/wiki/Gründungszuschuss

> - The applicant must still be able to receive unemployment benefits for at least ninety days at the start of the self employment.

does this just mean, you can't sign up for this if you are unemployed, and 90 days away from no longer being eligible for unemployment?

As I understand it that is the case. When the payments from the compulsory unemployment insurance end in less than ninety days you are no longer eligible. You get six months of unemployment benefits from the insurance if you have worked for twelve months, the maximum is a year if you are younger than fifty (just to give you an idea of how long you can expect to get unemployment benefits in Germany).

ok.

> - The applicant must be unemployed (he or she can’t switch directly from a job to self-employment). If the applicant quit her or his job they must wait twelve weeks before applying.

how does this square with it though? you don't get unemployment payouts if you quit your job, right?

You do get unemployment payouts in Germany even if you quit your job but only after (usually) twelve weeks. (Those twelve weeks are then also subtracted from the time you would normally receive unemployment benefits. That’s the “punishment” for quitting.) That’s the reason why this provision – also with the twelve weeks – exists.

I know next to nothing about social systems in the US which is why I don’t know which are the important differences I should point out :)

thanks for explaining all of this. just saw this explanation myself in the wiki article and came back to answer my own question - but i read german sloowly.

i also know next to nothing about the social systems in the states.

Does anyone know of a similar program in the UK?

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