World Capital of Start-ups with a Hipster Image
In 2011 alone Berlin saw 500 start-ups get off the ground in the city. Alongside Silicon Valley, London and New York, the German capital is the most important location for new IT businesses. It is a magnet for national and international start-ups, including the Viennese web service Archify which recently announced its move to Berlin. Futurezone has taken an on-the-spot look at this lively scene.
"The decision to make Berlin the centre of our activities was due to its strong community and the numerous chances to network", Stefan Menden, co-founder of JustBook, told futurezone in an interview. Furthermore the international investment community has representatives in Berlin and there is also a well established creative industry. `In 2000 there was already a lot of activity. Then the recession came but creative people stayed in the city.` According to Mendel it is the generation that stayed in Berlin during this time who have begun to form new companies.
The list of famous German internet companies in the city has become ever stronger. Names like Soundcloud, Wooga, 6Wunderkinder, Amen, Gidsy or Readmill are only a few examples whose names are mentioned in the international press. This has led to Berlin becoming known as `Silicon Allee.
500 Start-ups in the Last Year
One start-up after the other is popping up in the German capital. 500 new companies arrived in 2011, and 1,300 internet companies have been founded since 2008, according to the IHK Berlin (Chamber of Commerce and Industry Berlin). According to numbers from Thomson Reuters international venture capitalists have invested in 103 German start-ups, the larger part of the money finding its way to Berlin as most young companies are located there. Although most investors come from abroad, more and more German investors are showing an interest and are investing money in promising start-ups.
Many important events support the start-up community in Berlin, strengthen the ecology of the system and demonstrate the location`s relevance. This could be felt during the recent re:publica event. This so-called class reunion for bloggers has become one of the most important internet conferences. Prestigious lecturers from all over the world attend the event and discuss the latest internet developments as well as political questions related to the web.
The start-up project Genome has recently published a ranking of the best international locations for start-ups. Berlin was 17th on the list but many in Berlin believe it should be much higher place, especially as more and more young companies move to Berlin.
Tempting for Austrian Companies
A few days ago the Viennese web service Archify announced that after a financial injection from the London-based investor Balderton they want to leave Austria and operate mainly from the German capital. According to Archify founder Gerald Bäck, there are too few talented employees in Vienna whereas in Berlin there are many more people who could take up places within the company. The wide range of competent employees in the German capital is recognised international. In contrast to the US, many Berlin start-ups tend to be individual and bravely go against the trend in making themselves independent of big players like Facebook when developing their own products and services.
For Archify another argument is, that mortgages in Berlin are quite cheap by international standards. Offices which are financially out of reach for start-ups in London or New York, are still affordable in the German capital.
The Samwer Brothers
In the Berlin start-up community you can`t avoid the name Samwer. The infamous brothers were involved in the Berlin start-up community in the early 2000 years and are, with their partial copies of American models, one of the few survivors of the first internet boom. Some of their most famous start-ups are the eBay clone Alando, the ringtone provider Jamba, the video portal MyVideo, the social network StudiVZ, the online shoe shop Zalando and the online marketplace DaWanda.
Because of the many, more or less successful, copycats which are attributed to the Samwer brothers Germany is said to be a `cloneland`. Not long ago Pinspire, an overt copy of the photo platform Pinterest caused an outcry and attracted a great deal of criticism. Undeterred, the brothers have stuck to their strategy, not least because they have attracted many people to Berlin. `Naturally, networks as those founded by the Samwer brother are a magnet for many creative people. And these people stay in town`, Menden of JustBook says.
Between Hype and Hip
Berlin has been called to a cool and hip city for many years, and its party-scene and club-culture are internationally known. Artists, musicians and designers are ubiquitous. This also helps the start-up community. Inventiveness is a common trait and people who work on the technical side find themselves in contact with artists.
`Berlin is a very good location for us. There are many important people in town, especially from the music scene, who we have often contact with`, says Thorsten Lüttger, co-founder of Musicplayr. A lot has gone on in the city, especially during the last few years. `We meet many people who are of interest to our company`, mentions Rüttger, whose company was originally founded in Köln but is planning to move to Berlin. People are interlinked `everyone knows each other`. Although there is competition, Lüttger says that contact within the start-up community is friendly.
At the moment the hype about Berlin is big – some say extreme. Critics say that some people only come because the city is currently hip, perfect to go out in and meet people. To found a really good company you need a little bit more than to latch onto a cool location. `Of course Berlin is a little bit over-hyped at the moment`, Menden from JustBook says. `I am convinced that, as before, some of the well-financed companies will go bankrupt. Then you will hear things like "the bubble has burst, the hype is over". But, as at the turn of the millennium, talented people will stay and found new companies. Therefore, Berlin is the best location in Germany, without doubt.`
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