Berlin. Considered one of the best startup hubs in the world, Berlin offers a lot of diversity and an international ecosystem to those, who’d like to build their own startup. After my last article, titled London Startup Trends 2017, it’s time to move onto the continent. I met with the CEO at Caesium, Berlin-based productivity and collaboration software suite for freelancers, agencies and anybody who wants to work, get paid and find their next job - Nikita Gorshkov.
We managed to discuss the current state of the local startup scene, the changes that have occurred since the beginning of the year, predictions for the upcoming future and more. Now, less talking, let’s get to the point.
Then and now
There was no drastic change in the state of the startup scene compared to 2016-early 2017, but there was definitely a noticeable focus shift. The market matured and now offers more stability to employees, while investors allocate their funds much carefully and wish to stay with their startups to provide them mentorship.
When I talked to Jack Thompson, investor relationships manager in my last article, he classified investors into 3 types. I was curious to know if all of them are present in the Germany's market. Here's how it looks like in Berlin.
- 1st type - the profit-oriented investor - are of course present on the scene, there's no surprise in that.
- 2nd type - the mentor-oriented investor - the group is constantly growing its presence on the market. Since the shift, more and more investors want to invest in unique and innovative startups. Successful US startups copycats have much lesser chance to attract this type of investors.
- 3rd type - the take-my-money-and-do-what-you-want investors - are, obviously, also present on the market.
No matter what type of investors we are talking about, they’re getting more deliberate in terms of where they put their money. You’ll have to show more than just an idea to convince someone to invest in your company.
I know you might be wondering, what does Brexit have to do with Germany. Well, it’s a big deal for the whole Europe and even though it didn’t fully happen yet, I'd like to know if it had any influence on other startup hubs.
And when it comes to Berlin and Germany in general - the answer is - yes, it has influenced the market and probably even positively. Bigger financial players are planning to move their employment force from London to Frankfurt, which can’t be a bad thing for Germany. More heavy financial players equal more mature and richer ecosystem.
Berlin is also planning to become a post-Brexilt capital for FinTech, so quite frankly, Brexit might the best thing ever happened to Berlin Startups Hub.
Government support for startups
When I asked if the government provides startups with any support in any form, Nikita divided them into 2 available paths:
- German government funds - simpler to apply for local companies, they offer funds for early-stage startups that haven’t been funded in the last 2 years. You can get loans on good terms, up to 400k EUR.
- EU funds - you can get higher funding but you’ll have to provide much more documentation which makes them much harder to get.
Berlin startups to keep an eye on
I also asked Nikita to name 3 startups that, in his opinion, are doing a great job and growing significantly in 2017. Here are his favorites:
- solarisBank was funded in 2016 and gained a lot of traction in 2017. They offer digital banking and complaint services to their business end-customers. With a help of their API accessible banking platform, businesses can build their own financial products.
- Coup offers electric scouter renting services. You don’t need to have a driving license to drive them and it’s cheaper than public transport. Just download the app, locate the scooter, unlock it and feel free to ride.
- Clue - a MedTech startup focused on providing information regarding menstrual cycles and fertile windows. Clue raised 20m in series B and continues to grow.
Investor's focal point
When it comes to industries that investors are focused on right now, you probably won’t be surprised. Since Berlin would like to become post-Brexit FinTech capital - traditional retails banking industry is exploding right now. Huge companies like FinLeap are building an enormous infrastructure of startups that provide businesses with unique ways to interact and find new financial streams.
Berlin’s slowly moving away from making more and more apps, well, maybe because everyone already has an app, but companies are focusing more on B2B SaaS solutions, rather the regular B2C. Optimizing documents, optimizing financial flows, simplifying connections between different financial instruments, banks, the government. And there’s so much more to build, that it’s not really a matter of just an app, but something bigger and broader.
Trendy place for your office/HQ
When it comes to networking, and let’s be honest, if you’re building a company, having a broad network comes very handy. And if you’re looking to having networking opportunities far beyond monthly meetups or other bigger conferences, you’d like to upon your new office in startups-crowded areas. Co-working places are something you should consider, especially since Berlin has a few great offers.
- WeWork offers spaces in 6 of their offices, prices starting from 320 EUR/month.
- Factory Berlin - Google Campus for Entrepreneurs is a place for startups and mature tech companies. As Google usually does with their campuses, they offer a lot of support, training, events, accelerator classes and more. Membership will cost you 50 EUR/month.
The future is quite rosy for the Berlin startup hub, according to Nikita's predictions.
"Out of everything that I am able to see, although a lot of places and cities are vying for the position of the EU Silicon Valley, Berlin is, at this moment, the only one that has enough of a financial ecosystem to support any type of active startup development."
Considering Berlin's lackluster financial performance as a city, the government has the incentive to continue to support startup development and bring more companies and, hence, taxpayers into the market. Berlin also benefits for its' still continuing underdevelopment in terms of real-estate, providing marketably rent costs for both offices and flats and space for additional development.
Summing it up, Berlin's Startup Hub is definitely prospering and might get even bigger boost from the Brexit-related uncertainty. Upcoming months will most likely bring more successful international players to the market. If you have any questions regarding today’s trends or predictions for the nearest future - just drop me a line at email@example.com. I’ll be more than happy to help you out.