A simple search for ‘Berlin Silicon Valley of Europe’ brings up hundreds of results in Google. Articles that debate, declare and compare Berlin with America’s most famous tech hub.
But how do you get beyond the statements declaring Berlin to be the next Silicon Valley. You need the perspective of insiders.
We enlisted the help of BlueYard’s Ciarán O’Leary, startup consultant Nicole Simon, ElektroCouture’s Lisa Lang and JOIN Capital’s Chris Murphy. With their help, I’ve created this guide to the city’s startup scene.
Berlin’s Lingua Franca
It was Mark Twain who mused: “Berlin is the newest city I have come across”.
In 2016, this holds true. “Berlin is like a blank canvas,” says Nicole Simon, “people who come here find a very fresh atmosphere”.
The feeling of newness in the city could be a side-effect of its new lingua franca: English.
Berlin newbies, don’t expect to be fluent in German anytime soon. According to Ciarán O’Leary, people coming over to work for a startup in Berlin “will not learn any German because everybody speaks English”.
Many talk about how in the zones where there are lots of startups, visitors even have to defer to English to get around. Certainly this is true for those in Berlin who operate at an “international level”.
People like Nicole Simon might be based in Berlin, but they’re creating businesses for a global playing field. As she puts it: “We sleep in Berlin, we live in Berlin, but we think Silicon Valley. In this sense Berlin is different to Germany” she says. “When people come to Berlin they don’t come to Germany, they come to Europe”.
On the map
Berlin Startups who have raised the largest amount of money in the last five years
Top Berlin investment funds
- 1. Rocket Internet
- 2. Project A Ventures
- 3. Rebate Networks
- 4. Point Nine Capital
- 5. Earlybird Venture Capital
Top social influencers
- 1. Nicole Simon – Startup Consultant
- 2. Ralph Riecke – Investment Manager – hub:raum
- 3. Philipp Moehring – Startup Investor – AngelList
- 4. Tobias Loitsch – Founder – Harmony Minds
- 5. Sebastian Fittko – Founding Partner – EISBLINK
- 6. Sandy Hathaway – Founder – Retention Grid
- 7. Felicitas Hackmann – Editor – VentureVillage
Connected Berlin – Influencer Identification Network from Web Summit
Top five industry verticals
- 1. Mobile
- 2. E-commerce
- 3. Software
- 4. Advertising
- 5. Social Media
Startup life in Berlin
In many ways, Berlin’s tech ecosystem is still a youngster. But it’s one that’s quickly rising through the ranks. Just four years ago it was ranked 15th worldwide in the Global Startup Ecosystem Ranking, a trusted report on the world’s leading startup scenes. By 2015 it had jumped into the top 10, securing 9th place.
Berlin is becoming a bigger and better contender in the startup space with every passing day. If its phenomenal growth continues as expected, 40,000 new jobs could be created by startups by 2020, according to a McKinsey & Company report.
Berlin’s potential is not going unnoticed. The low cost of living in the city lowers the barrier to entry and tech talent from around the world have moved to Berlin. These eager and enthusiastic people flocking to the city are adding to Berlin’s exploding population.
Nicole has noticed this recent influx of people coming to the city to startup a business, adding to the city’s energy and talent pool. But, there’s a downside. “Some of them don’t know the basics of business,” she says. They come to Berlin for the party scene and lifestyle, forgetting that a successful startup takes a lot of hard work.
It’s a concern echoed by Lisa Lang, founder of fashion tech company ElektroCouture. In the past she’s struggled with finding people who are at a professional level to work with and run a business.
“The professional workflow is missing a little bit,” she says. Some of those working in the startup scene aren’t even aware of the basics, like writing invoices and the importance of being punctual. Oftentimes Lisa’s had to explain how to do simple tasks. “Sometimes I feel a bit like a mum,” she says.
However, these are problems that are likely to be teased out as Berlin’s startup scene grows up. In fact, this change is already in the process of happening. Berlin currently has the second highest Startup Experience rating in Europe, according to the Global Startup Ecosystem Ranking, with a 20% higher percentage of employees with prior experience in a startup. As the workforce becomes more experienced, it will no doubt become more professional.
The chaos that Nicole and Lisa speak of is to be expected for a scene that has grown so quickly. It’s a city that’s “come out of nowhere” according to Ciarán. Sure enough, Berlin scored 10 on the Growth Index on the Global Startup Ecosystem Ranking, thanks to a huge boost in both exits and investments.
The IPOs of note are of course Rocket Internet and Zalando, who both had IPOs of more than $6 billion. Yet there’s also smaller but significant exits from a number of startups including Sociomantic, Wunderlist, and Quandoo. These exits, combined with a double in VC investment, are proving that Berlin is one to watch in the startup world.
In 2014 Berlin attracted $2 billion in VC investments, and as a result attracted more growth capital than London for that year. High-growth startups such as Delivery Hero contributed most to this explosion of investment.
Despite the fact that Berlin is now a big player as a startup hub, people here are still eager to help each other grow. “In Berlin it’s totally fine to invite somebody for a coffee or a beer and ask them for their advice,” says Lisa. “People still do that without sending an invoice”.
Once you’ve reached out to interesting people, where should you have your meetings?
With up to 3,000 active tech startups in Berlin, it’s not hard to find a startup-friendly spot.
If you’re looking for a kick of caffeine, meet up in one of Berlin’s cafés. Kreuzberg’s Milch und Zucker, for instance, pride themselves in being “a relaxed place for creative freelancers”. Or if Mitte suits you better, The Barn is a popular spot for techies to connect. Quirky cafés are scattered across the city, so you’ll have no bother finding a spot to chat.
If you fancy something stronger, you could always visit one of Berlin’s bars. There’s the glitzy Soho House or Mein Haus am See, both of which are frequented by the startup community, making them great places for a spot of networking.
Hop into one of Berlin’s coworking spaces and you’ll see countless connections being made. Betahaus, located in the heart of Kreuzberg, is one of these hotspots. Here you’ll find colourful meeting rooms, large open rooms for events, and even a woodwork shop and hardware lab for tinkering with technology.
So you’ve got the meeting scheduled and you’ve chosen the perfect location. How do you get from place to place? Well, not by car anyway.
“If you have a car in Berlin you’re doing something wrong”, according to Nicole. Berlin’s U-Bahn, that’s the underground, is as efficient and frequent as you’d imagine for Germany’s capital city. You’re onto a winner if you’re on the U8 line.
That’s because it hits all the startup haunts that you won’t want to miss. Take a trip on the U8 line on the U-Bahn and you’ll pass through the regions of Mitte, Kreuzberg and Neukölln, all of which are busy with startup activity. The offices of Soundcloud, Zendesk, Roomsurfer and many others can be found in these areas.
Take it from me
Chris Murphy is an associate at JOIN Capital in Berlin. We caught up with him to get his top recommendations. Berlin virgins take note, these are the name and places you’re going to want to remember:
Top accelerators and incubators
Techstars – Entrepreneurs are given a boost with this initiative that is on a mission to improve diversity in tech.
StartupBootcamp – A global accelerator looking to invest in smart transportation and energy startups.
hub:raum – An incubator and accelerator for startups working in the German telecommunications space.
Techstars Metro – Striving for digital transformation in restaurants, hotels and catering companies.
Microsoft Ventures Accelerator Berlin – An accelerator that focuses on early-stage startups and first time entrepreneurs.
Top startup hangouts
St. Oberholz – A café on Rosenthaler Platz with wifi during the day and beer in the evening.
Le Labo – “Berlin’s first liquid nitrogen cocktail bar” – need I say more?
Neue Odessa – A great bar on Torstraße – try one of the cocktails!
Soho House – In a sweet location with creative vibes, great rooftop bar and pool – it’s amazing in summer.
Silicon Drinkabout – A weekly startup hangout that changes venue weekly.
Top places to go for dinner or get a drink
Dolores – Try Dolores if you’re a fan of burritos, there’s great vegetarian and vegan options too.
Shiso Burger – Pop into here for freshly made burgers with an Asian twist.
Omoni – One of the best places for sushi in the city.
Studio Tim Raue – If you’d like something fancy get dinner at this restaurant, located in the coworking space The Factory.
Top coworking spaces
Ahoy! Berlin – This coworking space has good prices and an excellent team.
St. Oberholz – Located on Zehdenicker Str. is this new coworking space in a great location.
Rainmaking Loft – Here you’ll find a great community, events and the bar Le Labo.
Betahaus – As well as coworking space, Betahaus also hosts a number of startup events.
Factory – The home to Twitter, Uber, Soundcloud and more – it’s good for later stage companies.
It’s an exciting time to be in Berlin as a startup. As a startup capital, it’s an underdog with bite.
What’s your view of startup life in Berlin? What have we missed? What are your recommendations? Let us know on Twitter @WebSummitHQ or in the comments below.