Europe’s start-ups are evolving
The European Digital City Index launched in late-2015 by the European Digital Forum Think Tank and Nesta showed some surprising results, not least for Berlin. Ranking the best cities in Europe for digital entrepreneurs against diverse criteria from classic markers like ‘access to capital’ to more original categories like ‘lifestyle’, Berlin came out just 7th for best in start-ups and 9th in the scale-ups ranking. But is Berlin really so far from the front of the pack?
The results are explained by ‘lower access to capital and expensive and sluggish digital infrastructure’ as well as a relatively high cost of staff. While true that Berlin can’t compete with the inexpensive labour of smaller underdog cities like Tallinn and can’t boast available capital as large as London, it arguably has to offer one of the most well-rounded start-up experiences for both founders and investors.
Let’s talk capital
For one thing, its size allows for comparably large capital. In 2015, London and Paris only topped Berlin for most funding. In addition, more cautious, researched investing may actually work in favour of lean start-ups with high potential and keeps the competition high enough but not as difficult to enter. Funding is also spread across a large number of companies, so though Cambridge and Lausanne are topping Berlin in terms of funding per capita per inhabitant, there are larger funding rounds going to a greater number of diverse companies.
Berlin’s still-low rental costs and multiplying affordable co-working spaces contribute to it being a place where ideas can incubate and burgeon without some of the financial risk. It’s also maturing. Success stories like Zalando and Delivery Hero not only encourage founders to bring their ideas to Berlin but create a hub of shared information and a healthy start-up ecosystem. Conferences, like our own, allow for networking, collaboration and ultimately the formation of an inspired talent pool, hungry to not only make use of Berlin’s hype but also the emerging American venture capital interest and the many established institutions, like Google, focusing on the city.
The vibrancy of Berlin also means its easy to attract talent. Now, with it being a more established start-up hub, that talent isn’t just coming for the fun lifestyle or cheap cost of living but for results and to benefit from an already-thriving internet sector.
While indexes offer valuable insight into shifts in the start-up ecosystem, exciting new places and evolving markers of success, Berlin is still a start-up city that keeps giving.