German startups fear OpenAI’s plans for a new office in Munich will intensify an ongoing tech talent crunch.
The ChatGPT-maker announced plans for a new office in Germany last week, having already expanded to London, Paris, Dublin and Brussels. While some celebrated the move as an endorsement of Munich’s attractiveness as a tech location, some AI founders tell Sifted they risk losing current and potential employees to OpenAI.
Germany is suffering a significant tech talent shortage. In March 2024, the country lacked 235k professionals across mathematics, computer science, natural sciences and technology, according to a 2024 report by The German Economic Institute. Some founders and investors say OpenAI’s arrival could exacerbate this trend.
“It’s a double-edged sword. On the one hand, it cements Munich’s position as a global AI hub. On the other, it creates a massive talent drain for startups,” says Fabian Beringer, founder of AI startup VidLab7.
“OpenAI—and soon others—will aggressively hire the best PhDs, researchers, and senior engineers from TUM, LMU, and local startups, offering salaries that early-stage companies simply cannot match.”
It remains unclear how many people OpenAI will hire in Munich, and for which roles. On Wednesday, the American AI giant published five job ads for the site; including account director, solutions architect and solution engineer. Salary ranges were not listed.
US-style compensation
Beringer says the premium compensation offered by US tech companies is now making its way over to Europe, and candidates in Germany are starting to expect much more.
“When OpenAI is offering upwards of €400K for research roles and €500K for senior engineers, similar to what they do in the US, startups relying on these specialists for cutting-edge innovation will struggle to compete,” says Beringer, adding that his company lost out on hiring a top senior AI researcher to OpenAI that offered the candidate north of €400k.
“The biggest challenge will be retaining and recruiting top AI researchers, machine learning engineers, and senior software engineers,” he adds.
Gilles Backhus, founder of Recogni which builds generative AI chips, however, is relaxed about the idea OpenAI will lure away talent with lucrative pay packets.
“I would be really surprised if OpenAI paid significantly more than other tech companies or well funded startups for good AI developers. Maybe they will, but they are not Nvidia, they are not printing money. They’re actually in the middle of becoming comfortably profitable during a race to the bottom in terms of the price companies and people are willing to pay for a token or an AI image,” he says.
“I could imagine the company will rather try to just rely on their brand name to attract great talent, which might work for developers who do not care as much about having deep impact on core features. I am sure openAI’s core development will remain in the US.”
Backhus adds that for many AI companies developing hardware, Nvidia — which opened an office in Munich in 2021 — is the bigger competitor for startups.
“Of course with the rise of the stock of large tech companies it has become much harder to compete as a startup with Nvidia in terms of talent.”
Startup life
Some candidates aren’t solely in it for the money.
“There will always be fluctuation back from big tech into the next generation of startups. People are not only driven by salaries,” says Claudius Jablonka, GP at Munich and Palo-Alto based firm Leitmotif.
“After some time in the satellite office of a US big tech firm, a lot of people strive for more fulfillment,” he adds. “Founders with a pedigree from Google Deepmind, for instance, have been able to attract great seed funding rounds; the experience in one of the big tech firms is a stamp of approval for these founders among international investors.”
Beringer agrees: “There will always be top AI talent who prefer autonomy, speed, and impact over a structured Big Tech environment. In startups, one year of development is like five years anywhere else—the speed and ownership are simply unmatched. The direct impact you can have is huge.”
While startups anywhere will struggle to compete with corporations when it comes to salaries and benefits, they can still compete in other areas, says Jan Miczaika, partner at HV Capital.
“Founders should double down on offering flexibility and autonomy, career growth opportunities, passion for the company mission and a compelling leadership vision. And see large tech companies as a hiring pool and opportunity to poach talent,” he says.
Read the orginal article: https://sifted.eu/articles/munich-founders-open-ai/
