Renowned as an international city of innovation and creativity, the German capital has become the choice of many entrepreneurs
Berlin is home to one of the biggest and most successful startup scenes in the world, with a new startup being founded every 20 minutes on average. The German capital is definitely on the rise as a startup city and some people have even given the city the nickname “Silicon Allee.”
However, the nickname gets one thing fundamentally wrong about Berlin. It isn’t trying to follow in the footsteps of California’s startup city and in fact, it never could. Berlin is just too distinct to be anything other than Berlin, which is exactly why it’s a uniquely amazing place for growing startups.
1. A nest for diversity
Berlin has been a hotbed for diversity since the fall of the Berlin Wall, a symbol that began a cultural renaissance as it crumbled. The city still attracts over 50,000 new inhabitants every year, with well over a third of the city’s population coming from outside Germany. Out of the approximately 3,500,000 inhabitants of Berlin, 16.5% are foreigners. Yet the rate of diversity is even higher in the city’s startups, with 49% of startup employees not holding German citizenship. In general, Germany is noted across the EU for having a comparatively lax visa process for foreigners, making it easier for talent from all walks of life to gather in the country’s capital.
Berlin is truly a giant collaboration of culture with inhabitants bringing customs and ideas from all over the world and spreading them city-wide. The city itself is quite stretching and there is room for every way of life thanks to Berlin’s tolerant and accepting nature. The freedom to be who you are in Berlin is one of the main reasons that it makes for such a good startup capital.
In an age where most startups have glass ceilings and Silicon Valley’s long struggle for diversity is noted by journalists everywhere, Berlin shines as a natural answer. A nonjudgmental city, startups in Berlin often advertise their open positions across multiple internet platforms, from Craigslist to Facebook and more, sending the word out low and high as they look for compatible talent. Silicon Valley startups have the tendency to send their recruiters to extremely prestigious (read: expensive) universities in search for talent, fishing in a bowl full of goldfish yet thinking they’re in the ocean. These startups foolishly fail to consider that these places are not accessible to people from less fortunate backgrounds or far off places. Berlin has beckoned to out-of-towners and foreigners from all over the world for years as a place to call home, whether you be from Stuttgart or Sri Lanka. Berlin startups took a page from their city’s book of etiquette, inviting to everyone and not just to rich, well-connected Ivy Leaguers.
It is also worth noting that startups in Berlin have higher creative value due to a mixture of skills in their employees. The city has long been known as a creative hub and startups here take advantage of the available creative talent as well as the tech talent. Alexander Ljung, co-founder of SoundCloud, told Whiteboard that Berlin is “a melting pot of art, tech, creators. There’s a ton of artists here, and a ton of tech people.”
2. A Party City
It’s no secret that Berliners have an affinity for parties and raucous nights; since it’s no secret, why try to hide it? There’s a common understanding in Berlin that everyone has the right to party and enjoy themselves, so people do just that. There’s no stigma or judgment attached when listening to your co-workers talk about their wild club experience last weekend, which makes for a refreshingly open and accepting air to the startups that live here. With a strong culture of acceptance amongst all types paired with the Germans’ historic love of beer, it is incredibly common and acceptable to enjoy a brew with your fellow startup worker (or even the whole team). The founders of German startups have an average age of 34.9 years old, which makes for relatively young founders and employees who know the value in team-building activities and rewarding, fun company outings. In fact, Henry Ford himself was once quoted saying, “Coming together is a beginning. Keeping together is progress. Working together is success.” He just left out that partying together is the revolution!
It could be said that people feel they are Berliners first and startup workers second, but instead of having a hierarchy of roles, Berliners simply mix the two. It is also worth noting that Germany’s attitudes towards drinking are quite carefree compared to America. While popping out for drinks with your boss after work in the States might seem inappropriate and uncomfortable, in Berlin, it’s just Thursday night. There are frequent networking events and workshops all nights of the week as well. Berlin’s love for socializing and grabbing a cold brew makes these events quite popular and busy. In fact, having drinks with others in the startup community increases partnerships and goodwill in the startup scene, which is why Berlin has one of the most friendly, tight-knit startup scenes in the world. These events can even lead to more excitement and collaboration between startup workers, which is just an added layer to the lively, collaborative spirit that embodies Berlin.
Making it big is the main goal on mostly every startup founder’s mind as they pick a brand name and buy a website. In that regard, startups are similar regardless of their founding city. However, startups in Berlin have a particular advantage when looking towards their future; since the German market is relatively small compared to the U.S. (and because overhead costs are lower as well), startups have a more forgiving environment where they can launch their product or service, collect feedback and make adjustments before going international. Yet, as a “practice market,” Berlin is extremely diverse as a customer base. The diverse population has already been discussed, but the geography of Berlin is also an asset to its startups. Berlin’s geographic location has long been a bridge between countries and cultures, known as the place where East meets West and as such has been heralded as the perfect capital for discovering the latest trends and innovations. That means that Berlin’s startups have a large, diverse and cutting-edge market in which to debut their service or product.
Although it may not be at the forefront of a startup’s plan for their premier launch, the hope and intention to hit the American market is never far from a founder’s mind – just another way that Berlin’s market comes in handy. Our startup Spacebase launched in NYC just two years after being founded and you’ll find that this speed is all but out of the ordinary. In fact, Wired says that Berlin’s hottest startups of 2016 are more international than ever when it comes to funding and availability. Germany may be the world’s strongest economy, but the U.S. has the world’s largest economy nationally, which means there are many more dollars for the grabbing there than at home. And when they finally hit the stateside shores, these tough Berliner startups will be ready.
Of course, after all of that positive PR, a bit of reality is needed as a disclaimer. Berlin is currently ranked ninth on Compass’s Global Startup Ecosystem Ranking chart from 2015. While it may be number one in our hearts, the European capital still has a lot of catching up to do concerning market reach and VC funding. Still, the edge that Berlin has when it comes to internationalization means that finding those resources is just a hop, skip and an exit away.