Berlin: The tech capital of Europe. But Why?
For many years, Berlin has been tipped to be the ‘start-up capital’ of Europe. For almost a decade, the so-called ‘Silicon Allee’ has enticed entrepreneurs, venture capital firms and technology experts from all over the world, creating an international hype around Germany’s ‘poor but sexy’ capital. However, many commentators, both in and outside of Berlin’s tech community, have been sceptical about its newly developed image as one of the world’s leading technology hubs.
The meteoric rise in e-commerce ventures hoping to be the next Zalando or DeliveryHero has led to an unprecedented surge in Berlin’s digital economy and generated significant interest from outside Germany. Critics have rightfully questioned whether the record levels of investment will provide the necessary return to stakeholders in an environment largely comprised of start-ups whose product or service has not yet reached a consumer marketplace. The element of risk is furthered by a historic lack of specialised skills and tech talent compared to San Francisco or London, both of which enjoy a more mature marketplace for candidates with technology-based skills. Nonetheless, Berlin has proven to be an attractive alternative to other European capital cities – the start-up and tech scene continues to thrive, attracting some of the best international talent from across the world. In 2014, Berlin received more venture capital investment than any other city in Europe, eclipsing London for the first time ever; €1.9 billion compared to London’s €1.3. The trend continues in 2015 as Berlin received €1.4billion compared to €1.1 billion invested in London in the first half of the year. So it’s official – Berlin is now the tech and start-up capital of Europe.
But why exactly? Low commercial rents in a city and its reputation for technology innovation are two important considerations for investors and tech entrepreneurs when setting up a business. Therefore it’s easy to see why Berlin has become the preferred option for investors, but how exactly are Berlin’s tech companies and start-ups successfully attracting the international talent when the demand is similarly high in London, Paris, Amsterdam, Stockholm etc.? It is more than just a low cost of living which continues to lure Europe’s brightest tech talent… So what else? Here I look at some of the reasons why Berlin’s unique start-up culture has proven so successful against stiff competition internationally.
It’s not just ‘start-ups’ anymore. Sort of…
‘Start-up’ is an ambiguous term and can encompass both large and small companies. However, there are certain features which most start-ups share; recently launched, somehow innovative and largely ‘uncorporate’. In the last couple of years, the landscape of Berlin’s technology scene has matured – the small and medium enterprises are no longer the only types of companies dominating; large, multinational, and even publicly-listed organisations have started to open offices in Berlin. US powerhouses such as Airbnb and Wayfair have chosen Berlin for some of their European operations, creating hundreds of vacancies but retaining their ‘start-up’ and disruptive energy. Established internet giants like these are proving to be desirable and less risky enterprises for a lot of Berlin’s technology professionals and their presence is a positive signal for investor confidence in Berlin’s tech industry.
Berlin’s tech scene has a unique sense of community which is very appealing for many tech enthusiasts…
Although the start-up scene is fiercely competitive, it also fosters a collegiate environment in which a significant number of techies partake in continual knowledge-sharing and collective development. There are endless meet-up events for like-minded technical professionals keen to enhance their skills and knowledge, as well as a growing number of incubators and co-working spaces for tech companies such as Betahaus, Factory Berlin and Hub:Raum, all of which help Berlin’s ecosystem to thrive. The city also boasts many large conferences and events with attendees from all over the world; the most famous of which is ‘Tech Open Air’ in July – an interdisciplinary technology ‘festival’. The event lasts for 3 days in July and gives a platform to a huge array of technology innovators across a wide range of disciplines. Described as ‘Europe’s coolest tech conference’, TOA has a distinct Berlin flavour – the event is completely open-air and features a soundtrack of live music and DJs.
It’s not just internet retailers hoping to be the next Amazon…
In recent years, Berlin’s tech scene has evolved and diversified into new markets, helping it become a more varied and interesting environment for those interested in developing their career within Berlin. A large part of Berlin’s e-commerce scene follows the B2C (business-to-consumer) model used by successful organisations such as Zalando. There are also many companies like Berlin’s Simplesurance whose product or service is based around a B2B (business-to-business) platform and is far less reliant on the consumer marketplace and arguably less risky. In the last few years, numerous companies in the ‘Fintech’ space have emerged including Lendico, Number26 and Billpay. Although Fintech is more established in London, Venture Capital firms are increasingly investing in Fintech in Berlin and the growth in this space demonstrates the potential for further diversification within Berlin’s technology scene. Gaming is also a hot area for the tech scene – Wooga, GameDuell and King all have offices in Berlin, and the multi-billion dollar gaming company Riot Games recently decided on Berlin for their European HQ.
The culture is international and dynamic…
Berlin has a longstanding reputation for being a multicultural city and its start-up scene perfectly reflects its multinational and diverse nature. The international community (originating from over 180 different countries) has strengthened in recent years as the hype around Berlin continues to attract people from Europe and beyond. Berlin has always been an attractive city for many foreigners, but in previous years a lack of German language skills was a barrier for many hoping to relocate. Over the last year, Berlin’s hugely international start-up scene has evolved and now English-speaking offices have become increasingly more common. Unlike 10 years ago, there are now plenty of job opportunities in Berlin – even for those relocators whose Deutsch is ‘geht-so’! The culture within many of the start-ups is exactly what you’d expect – regular team activities and flexible working arrangements, as well as varied benefits including subsidised lunches, free drinks, and gaming facilities. The offices themselves are often a big attraction to candidates – utilising Berlin’s famous industrial settings in novel ways within the districts of Kreuzberg, Mitte and Prenzlauer Berg. Berlin is world-renown for its nightlife and company events are often organised with a Berlin twist – one of Cogs Agency’s clients Glispa recently held a large-scale party for the opening of their new offices with hundreds of attendees, DJ sets and a 3AM finish. The Unbelievable Machine Company also host an annual ‘Umbash’ party and their recent event was at Berlin’s famous Weekend nightclub – the party is notorious within Berlin’s tech community and merges live performance art with a night of electronic music.
It is clear to see why so many of the world’s most talented tech professionals are looking to become part of the vibrant start-up scene here in Berlin and the foundations are firmly in place for it to continue growing. Please connect with me on LinkedIn to hear more about tech and job opportunities in Berlin. All our current tech job vacancies can be found here.
