Munich Is Big Internet Draw

American e-tailers interested in the German market should look to Munich for the services and personnel they need. The city is home to a quarter of all German start-up Web companies.

Also, what venture capital is left in Germany tends to flow into the Bavarian capital. The city is home to 37 percent of the country's Internet financing.

Both results are contained in a study by Bain & Co., a U.S. consultancy with German offices.

Hamburg and Berlin rank far behind Munich, even though both have a sizable number of Internet start-up companies. The three cities combined account for nearly half of all Web start-up activities in Germany, according to the study.

Bain & Co. cited several factors in Munich that help ensure its Internet predominance, including:

• The city is home to two large universities, a large technical college and a series of leading nonacademic research institutes. Together they provide a steady flow of ideas and highly qualified labor.

• The presence of multinational company Siemens' research facilities drew several U.S. electronics and software companies to the city.

• Cities such as Berlin, which had money to burn a year ago, have almost none today.

• The Bavarian government has gone out of its way to make the establishment of high-tech companies as painless as possible.

But Bain pointed out that Munich was not invulnerable, given the precarious situation of many Internet companies. Bain surveyed 221 Munich firms and found that only a few would break even this year.

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