Europe is quietly filling up with university-born companies. A recent analysis of EU-27 ecosystems identified more than 8,500 spin-offs across the bloc; highly innovative, IP-rich companies built on academic research, yet still only about 8% of Europe’s high-growth startups.
In Germany, universities reported 2,927 start-ups in 2023, and nearly 40% of them were directly based on scientific research or technology transfer.
To understand how these trends stack up against developments in Western Europe, we sat down with David Photien, Founding Partner at Germany’s SCE (Strascheg Center for Entrepreneurship) Freiraum Ventures. The firm is placing deliberate early bets on university spin-offs, and Photien shared his views on the potential within German universities, and what it might take to replicate similar success across the CEE region.
Betting on “Leeway”: The Freiraum thesis
“Freiraum is a German word, and it literally means leeway,” Photien explains. “We want to give leeway to startups and early teams that are just starting their journey.”
The fund is a spin-off from the Entrepreneurship Center at the University of Applied Sciences in Munich, one of three major universities in the city alongside TUM and LMU.
“We originally come from a university ourselves,” he says. “We’re a spin-off from the entrepreneurship center of the University of Applied Sciences in Munich.”
Launched in 2020, Freiraum Ventures focuses on pre-seed, university-linked startups, sector-agnostic, typically investing up to €200,000 as part of early rounds. “We want to support early-stage teams that come from a university, in a best case, a university spin-off, or a team that has gone through a university incubator or accelerator. That’s something we really like to see in our teams,” Photien explains.
Why university spin-offs?
When asked why he is betting so heavily on academic ventures, Photien points straight to the depth of expertise and networking that happens in universities. “It’s great when teams come from a university, because in most cases they have worked on something before,” he says.
“Think about a PhD candidate who has researched a specific field for a couple of years — they’re real experts. In the best case, they see that what they have researched can potentially become a company, and they find the right co-founders. That’s our best-case scenario.”
This mix is exactly the kind of edge spin-offs can have over “normal” startups. “It combines something that comes out of academia and an educational institution, it’s a bit of a filter for us. And it can really disrupt markets, because it’s often very basic research that’s behind it.”
But Photien is equally clear about the built-in risk:
“At the same time, if it is too much of a research project and there’s no market or commercialization, then it can be challenging. That’s where the team comes in. We don’t invest because we love the technology. We invest because we want to see that this technology leads to money in the future and leads to monetization.”
Germany vs. CEE: When Academia stays in the Lab
While Germany reports over a thousand research-based startups a year from higher education institutions, many CEE ecosystems are still trying to connect the lab to the market in a systematic way.
In places like Eastern Europe, university projects often stay academic: researchers publish papers and defend theses. But stop there. Photien sees entrepreneurship education as one of the key differences.
“That is also the reason why entrepreneurship centers in universities are very important,” he says. “In our case, our entrepreneurship center supports students with a curriculum that already teaches entrepreneurship.”
Students don’t just write business plans; they try to build things. Yet many of the ideas never see daylight.
“At least the students learn what it means to think differently, not just about the product itself, but about how it can generate value for potential customers,” he explains. Even if they never start a company, Photien argues, that mindset is valuable:
“Having an entrepreneurial mindset is one of the key qualifications even big companies like Google or Siemens want to see in their talents.”
How Freiraum Finds the spin-offs worth backing
Freiraum does not sit back and wait for decks to show up in their inbox. Their deal flow is built on tight relationships with university incubators and accelerators.
“We are in touch with a lot of university incubators, because when you go through these incubator or accelerator programs, you’re already more serious than just being a researcher in a lab,” Photien explains. “You decide as a team to take the step and join a program for three or six months, that already shows you’re willing to go to the next level.”
Instead of only attending demo days, Freiraum talks to the people who see the teams every week.
“We talk to the coaches that run these programs. They see the teams over a certain period of time, not just on one demo day. We ask: tell us the teams that have performed really well in the last six months, and why.”
The key signals he looks for? Learning speed and ability to pivot. “If teams are able to pivot quickly and learn quickly within that period, then there’s a good chance they will also continue doing this,” he says.
“If it’s a team that has one idea and doesn’t listen to anybody, that might not be a good case.”
Too early for VC? Why Freiraum plays at pre-seed
A German angel investor Martin Giese once told me that early-stage founders often make the mistake of going to venture capital too soon. Photien largely agrees, clarifying that the first rounds are mainly dominated by business angels, family and friends, or people with domain expertise.
“We’re an exception because we invest very early in pre-seed, but we are organized like a venture capitalist while investing like a business angel,” he adds.
That means structured processes, and a lot of pattern recognition. “We have due diligence, an investment committee, more partners in the fund with different views on teams, and advisors. I see over 150 pitch decks every month. Business angels normally don’t have the time to look at that much deal flow.”
Particularly for academic founders in Europe, Photien sees grants as the ideal first step. “Grants are a great opportunity, especially in Europe,” he says. “They are like a Kickstarter: they give you runway—the leeway—to develop the product to the next step, where you are able to talk to a customer and say: look, I have this technology that is already a product, and now it can solve your problems.”
Founders who can pivot
The biggest red flag? A lack of learning and pivot capability. “I cannot underline strongly enough how important it is to pivot the company,” he stresses. “From the moment you start talking to a customer and get feedback like, ‘I like your product, but…’ — that ‘but’ is very important. That’s where you see if a company learns.”
Not every customer request should dictate the roadmap, of course, but founders must be able to judge when it’s a signal and when it’s noise.
“The startup has to decide: if this customer tells me they want a different solution, is this potentially a problem for many other customers? If the answer is yes, you have to pivot. If the answer is no, and it’s just a very special case, then you shouldn’t.”
For a fund betting on university spin-offs, that ability to move from research logic to market logic, without losing the depth of the science, is the real differentiator.
“Most companies will be completely different after two or three years,” Photien says. “So it has to be the right operators for the business who can actually do this transformation.”
