Loses its punch, maybe, but it still makes sense, no? After all the potential failure of the incumbents is a "startup's joy"?

Would the correct German (okay, German/English pidgin) be "Schadenstartup"?

"Schaden" is roughly "harm". "Freude" is just "joy". So, no, Schadenstartup doesn't make much more sense.

I tried to think of a phrasing that would work for the idea, but nothing came to mind with a similar ring to it. In kind of faux German, Startupschadenfreude, being sure to pronouce "Startup" as "Schtartup" might be amusing. :-)

Startenfreude.

But make sure you pronounce it as "Schtartenfreude".

No, that just means "damage startup."