European Tech Hubs - Berlin

Growing up and going to college in America, I gained the impression that Silicon Valley is the “place to be” for technology innovation. Watching films like The Pirates of Silicon Valley as a budding engineer reaffirmed this view. Indeed, since the 1980s, Silicon Valley has served as the foundation for technological innovations that created whole industries and brought on the information economy. However, the 21st century saw unprecedented technological progress around the world and a fierce competition in high-tech startups and venture capital. While Silicon Valley remains a dominant ecosystem for startups, other successful tech hubs have sprung up across the world. The most notable ones in the west are New York, Berlin, London, and Paris.

Quantitative evaluation of cities is inherantly difficult, and any sort of ranking is necessarily subjective. However, according to Expert Market, Silicon Valley’s ranking in the world has wavered. In fact, Expert Market’s 2017 report suggests Beijing is the top tech hub based on the early stage funding, cost of living, and startup experience. The Zhonguuancun tech community in Beijing is trailed by Berlin’s “Silicon Allee” in second place, and Silicon Valley in third. Just a year earlier, in 2016, Berlin outranked Austin’s Silicon Hills, Toronto’s Silicon Valley North, and San Francisco’s Silicon Valley. That year, the German city was named by Expert Market as the number one tech hub for living and working.

Over the past few years, the German capital has made an effort to put its name on the map, and it seems that Berlin aims to become Europe’s biggest tech cluster. Currently, Berlin is estimated to be home to some 2500 startups - SoundCloud, Wunderlist, Zalando, Babbel, Wimdu, and N26 are some of the successful companies born in Berlin. Some tech giants, such as Facebook and Airbnb, also have core offices in this city.

Berlin seems like an especially wise choice for entrepreneurs looking to quickly establish a global presence. Isolationist philosophies have arisen from the political climates in the United States and the United Kingdom. The closing up of these markets may encourage the migration of American and British innovators to tech hubs like Berlin.

In deciding on capital markets and labor markets, Berlin is a serious contender.

Capital Markets

Berlin has a relatively high number of startup accelerators, including big names like Axel Springer Plug & Play, Techstars Berlin, and the Founder Institute. The German government also supports local startups through grants to high achieving students and university scientists. For example, the University Startup Factory and Exist Business Startup Grant help talented student’s get their ideas off the ground. In 2016, Berlin’s startups collected 2.86B USD in venture investment.

Labor Markets

Compared to Silicon Valley, Berlin is extremely affordable. A one-bedroom apartment in the city may cost about 900 Euros (1110 USD) per month, while similar lodging in the California tech hub costs 2300 USD and higher. Utilities, food, and medical care all cost substantially less in Berlin, compared to Silicon Valley.

Berlin is known for the third highest visa acceptance rate for candidates from abroad, compared to other startup ecosystems. It also boasts the highest number of immigrant founders in Europe, at 43% - second in the world after Silicon Valley. The city is a diverse and open ecosystem that welcomes talent from across the world.

Once in the city, tech professionals will benefit from a great culture and tech community. The city is famous for its vibrant nightlife, regularly held events for young entrepreneurs, and numerous cafes that foster networking and collaboration. A great example of the Berlin tech community is Factory Berlin. Factory Berlin is a campus and a social platform that gives entrepreneurs a unique chance to meet up and be surrounded in the working environment by fellow companies, freelancers, and investors. This coworking space is known as Germany’s startup mecca. Such household names as Google, Audi, SoundCloud, Uber, and Zendesk have business incubators at various Factory locations.

Conclusion

Having spent time in both Silicon Valley and Berlin, I find that Berlin has solutions for many of the well-reported issues in Silicon Valley. Nevertheless, Silicon Valley is still a much larger ecosystem, and takes a much larger share (about 28%) of global startup investments. If you are a mobile entrepreneur, Berlin is worth consideration as the next “base camp”. At the very least, it’s worth keeping an eye on this market as the political and social environments continue to evolve in America and the UK.