Are you looking for the best European city in which to establish your startup? If so, should Berlin be at the top of your list? You have found it!
I have gathered a variety of viewpoints from other Berlin-based founders and VCs in order to give you the full dirt on the scenario, including the good, the bad, the ugly, and the future, as someone who has experience with the startup scenes in Berlin, London, and Rome.
The Positive:
• Affordability and livability. With little resources and low salary, the early years of beginning a business can be challenging. Berlin is still a more affordable option than other big European cities like London, Paris, or Amsterdam despite its gentrification. You can concentrate on your business without going broke if you have cheaper rent costs, accessible transportation, and a generally high quality of life. Plus, you can always locate some Club Mate to get you through long evenings at work! Whether you speak only English or Deutsch, you will feel at home in this diverse and welcoming community.
- Hub for software. The startup culture in Berlin is growing, particularly in the software industry. Even after Brexit, it will not be as big as London, but there are still a lot of brilliant people there with a range of abilities in many industries. The best and the brightest people is already being attracted to the city by tech behemoths like Amazon, Zalando, N26, Microsoft, and SAP, from which your firm can benefit. In addition, you will have access to alumni with advanced degrees from prestigious universities like TU Berlin, ESMT, and CODE.
• Technology. if you are into it.
The Negative:
• There is not as much exposure to foreign VCs and angel investors. Without a doubt, Berlin, along with Paris, is a true EU leader with a wealth of talented venture capitalists and accelerator programs. However, it is not quite there yet in terms of large amounts of venture capital and angel investors with a global reach, so if your goal is to maximize networking opportunities, you might be better suited setting up shop somewhere else.
- • Not intended for deep tech, hardware, or money. Berlin may be a center for software and it undoubtedly offers talented people a variety of experiences, but it lacks the opportunities for specialization and customer development that other cities provide. If you already know what fields you want to pursue and have no other reason to be in Berlin, you might find that other locations are more advantageous. For instance, London is the fintech capital of the world, offering a wealth of skilled engineers, PMs, and VCs. Due to its connections to the industrial and automotive sectors, Munich may be a better alternative for hardware. This means that there are more opportunities to engage with and interact with potential B2B customers as well as more specialized people with relevant job experience in the sector. A further issue with Berlin’s infrastructure is the city’s slower internet speeds, which could force deep tech businesses to depend more heavily on cloud service providers or raise operating costs.
- • More red tape (in German). While a startup’s ability to prosper in a highly regulated market may be demonstrated (right, SumUp? ), the administrative side of things in Berlin can be a barrier to incorporation, tax, and customer development. Bureaucracy is never enjoyable, but it is especially less enjoyable if you do not know German fluently. Additionally, it is not as efficient as, say, the UK system, where you can quickly manage most share and structure-related matters online and set up a business in as little as 48 hours. Additionally, non-EU citizens face additional challenges because they need a residency permission in order to open a firm, but this is not the case in the UK and other EU nations like Estonia thanks to their e-visa for founders program.
- Technology. if you are not into it.
- Future Prospects: With rising interest and a talent shortage, the future of software and AI is promising. However, the law is a little bit of a mystery, with friendlier places that can steal the show, as it did with Web3 and Lisbon.
- Fundraising may grow more difficult generally, but this is not a Berlin-specific problem. In order to attract funding, entrepreneurs will increasingly need to demonstrate their industry influence. Proper de-risking will be essential (even more so given that German investors tend to be slightly more risk-averse and analytical than their UK counterparts). But fear not—Berlin is also home to a sizable number of angel investors who might be a fantastic substitute for conventional venture capitalists.
Key Figures
There are hundreds of venture capital firms in Berlin, with well-known brands like Lakestar, Point Nine, and Earlybird Venture Capital leading the pack. Finding the perfect fit is key, not concentrating on size.
Though some firms have attained unicorn status, attention is increasingly focused on the more recent entrants at the Series A or Seed stage, particularly those embracing the AI revolution (have a look at Merantix, the first AI Venture Studio in the world). ). N26, Trade Republic, SolarisBank, Wefox (fintech & insurtech), Flink (foodtech), and Contentful (SaaS CMS) are a few of the pioneers blazing the trail. InFarm (urban farming), SumUp (fintech), Urban Sports Club (sportstech), Choco (foodtech), and Sennder (freight) are a few other notable start-ups.
In conclusion, Berlin’s startup ecosystem is growing, especially for companies developing software and artificial intelligence. The city has a wealth of funding opportunities and a diverse population of smart people, which together create a culture that is welcoming, open, and inclusive and is ideal for creators. It is important to keep in mind, though, that it might not be the greatest option for people who wish to build in hardware, deep tech, or finance (non-Germany focused).