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Berlin’s appeal to global talent and creativity has led it to become one of the world’s most dynamic cities, and arguably Europe’s greatest technology startup hub.
The rise of Germany’s capital to such status has been rapidly following the country’s reunification in 1990. Notions of internationality, art, openness and diversity really came to the fore during that period.
“It is ideal city for the startup mentality,” said David Armstrong, CEO of Berlin-incepted travel company and app, HolidayPirates. “The cost of living is low, office space is easy and cheap to come by, the average age of the talent pool is young, and the internationality that exists in Berlin is vast and diverse.”
This environment has not gone unnoticed, either. “A lot of venture capital sits here as a result, as Berlin is a prime place to invest in startups,” said Armstrong.
“As a startup ecosystem, the city is an absolute magnet for the right people, the right amount of people, the right skills, and the right amount of investment.”
HolidayPirates’ founding team earmarked Berlin as the ideal location to incept the company, becoming one of many entrepreneurs to leave their initial base in search of the capital’s charms.
This business pilgrimage is indeed a journey well travelled for tens of thousands of people in general. “People flood to Berlin from around the world,” said Armstrong. “After Germany’s reunification, its vibe has become so popular and attractive.
“Now, its 3.5 million inhabitants are so rich with subcultures, each enjoying the low cost of living, the amazing work-life balance and the dynamism that Berlin has to offer.”
Armstrong believes Berlin is as much as three times cheaper to live in than even Munich. It is a unique break from the general mould that has attracted so many people from around the glob. This, in turn, fosters an even more diverse and international environment, which then lures more and more youngsters. The snowball continues to build.
“It’s the entire culture that Berlin possesses which entices people,” said Thomas Holl, co-founder and CTO of Babbel, a subscription-based language learning app and e-learning platform. “The city is also very arty, creative and gentrified. It attracts a lot of creatives and intellectuals.
“From a startup perspective, it’s not just the amount of international input that’s available – it’s the types of skills and mindsets that are being attracted that suit so perfectly.”
Opening up to the world
There are numerous cases of successful startups that have travelled longer distances than Babbel or HolidayPirates to reap the rewards of Berlin’s ecosystem.
Femtech giant Clue joined the party just under a decade ago, with its founding team seeing Berlin’s academic and technical knowhow as a key driver for starting up in the city.
“At that time, it was all about startups here,” said Clue’s Danish CEO and co-founder, Ida Tin, who chose Berlin over Copenhagen to incept the business. “Loads of my business partners and friends were starting or joining companies in Berlin. Events were opening up to the ecosystem. Talent was arriving from all over the world, and international money was following close behind.
“You could see Berlin opening up to the world and we were part of that wave.”
But Tin now sees how saturated the city has become, which could dilute some of the initial exuberance and agility that helped create such an environment. However, she conceded that the initial snowball effect was key in getting the ecosystem to where it is now.
And still they arrive. Dreams is one of the latest to open an office in Berlin, with the Swedish financial wellbeing app leveraging the city’s social makeup to build on early successes in helping users feel better about their money through cognitive and behavioural science.
“Dreams was created in direct response to the big banks’ inability to communicate with digital natives about asset management and personal finance products in an understandable way, and this fits in with Berlin’s social ethos,” said the company’s CEO and founder, Henrik Rosvall. “Berliners are early adopters of digital tools, and were among the fastest in the country to move to a cashless system, and to experiment with different kinds of bank accounts.
“This can, in part, be put down to Berlin’s booming ecosystem for technology startups, which naturally speeds this transition up.”
Sweet spot between Silicon Valley and the Nordics
Rosvall said that, as Germany’s technology centre, Berlin’s talent pool, stature and sheer volume of opportunity are second to almost none across Europe. However, despite the city’s ever-growing escalation, which is comparable to hubs like Silicon Valley, its mindset remains much more aligned to Dreams’ home in the Nordics.
“I actually believe there are more similarities than differences between Berlin, and Stockholm and Oslo,” said Rosvall. “All cities are incredibly supportive of both new and established startups, and there is a strong culture of knowledge-sharing, feedback and support among companies that have chosen to put down roots in these cities.
“That said, Berlin has the edge when it comes to supporting its own unique startup ecosystem. In Berlin, it isn’t just a case of companies supporting other companies, there are also entire businesses that have been set up to help facilitate this sense of community. Factory Berlin is a great example – it offers community spaces, startup labs, programmes and events.”
HolidayPirates’ Armstrong agreed that Berlin has found an ideal sweet spot between San Francisco and the Nordics.
“We don’t have the same toxicity that exists in Silicon Valley, where people are being poached and everything is so competitive,” he said. “But you do have the scale and volume, which takes risk away for individuals, creates a dynamic and lively hub, and that ensures there is plenty of money around to support new ideas and ventures.”
Babbel was in that exact situation about 13 years ago, with the addendum of trying to start a language-based application, making Berlin’s internationality and opportunity attractive.
“We needed people on our team who could speak so many different languages if we were going to truly achieve our global ambitions,” said CTO Holl, “and I can’t think of another city in Europe that could provide such a blend of talent, with all of the social benefits that come with being based there.”
Berlin’s rise to startup prominence has had a profound effect on the rest of its wider business status, with many established companies, entrepreneurs and investors also now entering the city. Perhaps most importantly, though, it has had a hugely beneficial impact on how Germany and its capital are now viewed by the rest of the world.
Armstrong concluded: “Berlin is now a beacon of all the exciting, young, fresh, open-minded ways of thinking that drive startup companies to success. As such, these values are now altering wider stereotypes of how other countries perceive Germany.
“The growth of this diversity, creativity and social agility, has brought a completely different angle of Germany to the table.”