They are called Hero, Plancraft, Meisterwerk or – sitcom fans take note – Tooltime, and their software offerings are aimed at a particularly diverse target group: the German skilled trades. With its numerous sectors ranging from bricklayers, carpenters, roofers, electrical engineers, plumbers and glaziers, to bookbinders and clockmakers, the sector often referred to as the core of the German economy has recently become the focus of start-ups and their investors.

Despite its small-scale nature, the startup scene sees great potential for efficiency gains and growth in the sector. The magic word is digitalisation: moving away from paperwork and manual order calculation, construction site documentation, working time recording and invoicing, towards cloud-based software that allows orders to be processed paperlessly, and from anywhere, via an app.

The market is „currently developing more dynamically and promisingly than ever before“, says Bertram Wildenauer, CEO of Meisterwerk, which was founded in 2018, and has developed an app of the same name to simplify operational processes for customers.

Investors have recently been jumping on the bandwagon. It was only at the end of July that Berlin based Meisterwerk raised 6 million euros in a Series A financing. The round was led by Portuguese venture capitalist Semapa Next. I2BF from New York, Nexxus Capital from Singapore and existing investors, such as Vienna-based Speedinvest, were also involved.

Even more money flowed into rival company Hero from Hanover shortly beforehand. Although the provider was only launched two years after Meisterwerk, it already completed its Series B funding, totalling 40 million euros, at the beginning of July. The main investor here was the VC firm Eight Roads Ventures, backed by the US financial services provider Fidelity. Essen-based Cusp Capital, which was founded in 2021 by former Tengelmann Ventures investors, was also involved.

In June, Hamburg-based craftsman software provider Plancraft also received 12 million euros – the money came from Swedish start-up investor Creandum, which has also made bets on Klarna, Spotify and Taxfix in the past. Berlin-based Tooltime, which was founded in 2019, most recently raised 30 million euros, in June last year.

For Stephan Blank, the current keen interest from founders and investors in the German skilled trades sector comes as no surprise. „We have been observing this for a while and are also committed to it,“ says the Managing Director of the Mittelstand-Digital Zentrum Handwerk, which supports handwork businesses via digitalisation, and is funded by the Federal Ministry of Economics. Through various events and initiatives such as „Make Innovation Handwerk“, the network has been working intensively since 2016 to bring start-ups together with handwork businesses, and create a new ecosystem in this area.

In Blank's view, the industry is „absolutely aware“ of the relevance of digitalisation. This was recently shown in a Bitkom survey from 2022, in which more than half of all 500 trades businesses surveyed agreed with the statement that digitalisation would secure the existence of their own business. Two thirds were already using digital technologies at the time – a significant increase compared to previous surveys.

At first glance, however, the study paints a somewhat inconsistent picture. In the same year as Bitkom, market researchers from IFH Cologne also surveyed German handwork industry companies about the importance of digitalisation in their businesses. They concluded that the topic was „attributed a rather low priority“. This was particularly true for smaller companies.

But there are many of them in the skilled trades sector. According to the German Confederation of Skilled Crafts (ZDH), Germany currently has around one million skilled crafts companies that employ an average of just under six people. „In such small companies, there is often no Chief Digital Officer and no R&D department,“ says Blank. There are funding initiatives such as the Mittelstand-Digital Zentrum Handwerk or digitalisation advisors in the chambers and associations of skilled trades, who can provide support with specific issues, and support digitalisation measures in companies on a selective basis.

„However, the digitalisation of a company is not a one-off matter, but rather a process that should be approached and accompanied continuously and systematically. As is often the case in larger corporations,“ says Blank.

However, it is not only the lack of resources that often stands in the way of the digital transformation of the skilled trades. Another factor is that the sector was simply not the main target group of large software companies for a long time, which means that many companies often still consider existing digital applications to be „oversized“ for their needs, according to surveys. „We don't need SAP solutions in trade businesses,“ says Blank.

Nevertheless, he believes that software start-ups in the skilled crafts sector can earn good money. The prerequisite is that the tools can be implemented without a great deal of prior knowledge. „Plug and play“ is the motto, says Blank. „At the end of the day, they have to be offers that tradespeople can use quickly and where real added value is immediately recognisable.“