Around the Berlin Startup-Ecosystem in twelve months

It has been a year now for me to be in charge of ?Startup-Affairs“ at Senate Department for Economics, Energy and Public Enterprises in Berlin. Even before I knew some points – I was working with Centre for Entrepreneurship at Berlin Institute of Technology. [Here a link to an idea on entrepreneurial universities.] But in the past twelve months I had an intense learning curve, catapulting me into administration and into the startup ecosystem. Let me skip the administration part and have a look at my condensed findings on the Berlin ecosystem after 12 months’ time.

Berlin Narrative

The Berlin startup narrative on “why Berlin” offers different explanations. There are Richard Florida’s findings that define “talents, technology, tolerance” as perfect breeding ground for startups. There is the Berlin long-standing history as city of freedom, welcoming people from all over the world. There was the famous quote describing Berlin as “poor but sexy”, especially considering the consequently cheap rents for flats and business-premises. The description of factors buying into the Berlin narrative I like most is written by Fabian Westerheide: Die Geschichte des Berliner ?kosystems, underlining the fundamental part that is played by the Berlin Startup-Alumni.

All of us are aware of dozens of additional influencing factors. Some might even have been policy triggered like the early establishment of IBB bet, the venture capital arm of the Berlin Investment Bank.

Who knows – the overview

It is hard to tell the actual number of startups in Berlin. There is not even an allover accepted definition of a startup. Some people might even confuse startups and founders.

We are happy to have Gründerszene, the Deutscher Startup Monitor (DSM) and the Startup Genome Ecosystem reports. There is Crunchbase, there is Angel list and more. But we do not have a curated and updated list of Berlin startups.

In Israel there is startupnationcentral.org, in Munich there is munich-startup.de run by a public company, there is privately run hamburg-startups.net. In Berlin there is no site that can claim to be the central startup office or administration or landing page. Maybe this is wise for nowadays search engines will help to find the way to “your” startup. Maybe this is unwise because Berlin could profit from such a list. Different target groups could be addressed with such a list. What is clear – creating and maintaining a list of Berlin startups would be hard work.

However, there are several platforms for start uppers that help to have a “nice” splash into the ecosystem, meetup.com being an important one. Others are the innumerable events, big ones like deGUT, Tech Open Air, CubeTechFair, Startup Camp, TechCrunch Disrupt and more.

[above: view of Berlin from Tech Open Air]

Internationalization

Berlin definitively is part of the international startup community. Besides various international rankings this can also be seen by the number of immigrants into the ecosystem.

Investors already claim their base to be an “easy jet airplane.” Investors from all over the globe need to touch down in Berlin to bring capital and connectedness and experience to Berlin. The same goes for talents and CEOs. Berlin needs to be connected and benchmarked, exchange helps making it better. Different public – like Berlin-Partner's Berlin Start Alliance – and private players in the ecosystem are working on Berlin’s internationalization.

Digitization

Berlin’s heterogeneity is an outstanding, maybe unique factor in Germany. Berlin has eCommerce, not only but outstanding: Zalando. Berlin has mobility, Berlin has eHealth, Berlin is big in Fintech, in IoT. Berlin has greenTech and startups on energy transition. Berlin is big in blockchain. Berlin is growing on social startups as well. You will hardly find a branch or technology that is missing in Berlin. Common denominator for most Berlin – and presumably worldwide – startups is digitization. Startups are (mainly) digital, but not all digitization come from startups. Digitization can play a mayor gluing factor when it comes to cooperation between startups and grownups.

Startups and industry and Mittelstand

There might have been a time when startups thought mainly about replacing the “grownups”. However, the grownup players are still around. Today you can easily get the impression that the grownup industries’ position has stabilized – somehow. They can perfectly spell the word digitization. They seem to have a whiteboard of their value added chain and their business units with stickers on it linking each activitiy to corresponding means of digitization. And they do care about these stickers – not only publicly visible in digital labs. And I guess they really see digitization as a problem-solving tool.

Is the same true for Mittelstand? I have my doubts – and this is where an unbelievable amount of activities from private and public middlemen and -women takes place. It is about transfer – and exchange – of business culture, it is about purchase, it can be about cooperation and co-creation. It might be about investments – for the Mittelstand nowadays hardly gets interest rates from banks for its hard earned savings. And it always might be a piece of HR and recruitment.

One main objective for startups seems to be finding the first pilot customer. Here the Mittelstand can be the ideal partner, also considering future usage of the Mittelstands' existing channels and partners.

Startup bundling

What I thought could be a new trend did not come true yet: startup-bundling. I discussed several times whether the cooperation between startups could strengthen their position, could make startups become “system-provider” and not fill-ins or add-ons in existing value chains. I see Solaris Bank as one provider that could develop further into this direction. And I still see potential, especially when it comes to focused accelerators or company builders.

And – an effective bundling of startups might then again destabilize the position of grownups.

Universities as breeding ground

Universities and research institutes do already accompany Berlin’s development as a startup hotspot from a research point of view. We are looking forward to the next learnings.

On the operational and impact side: DSM 2017 provided (not representative but still useful) data: 81.1 % of founders in Germany have a university degree. This is again a signal for the obvious: push universities into the core of the economic innovation engine (see also here). There still is more potential than what is already realized. Additional transfer of knowledge in different channels is possible: cooperation with existing enterprises, spin-offs, licensing of patents, licensing of knowledge, co-research and more. There are public programs that foster this development, more incentives would make sense.

Selected Challenges

Infrastructure is becoming scarce. Business premises as well as private flats for Berliners and for immigrating employees. The provision of digital infrastructure like broadband and 5G can become an important factor when dealing with the future.

Is capital and financing an issue? Different people talk different languages on the need of money. “There is never enough money” is the sentence I keep in mind, spoken by a “big” investor here. Others claim: good projects will find the money they need. What we can see is that some attention slides to the scale-ups. Because “older”, scaling startups provide most employment. A need for money for those big later stage rounds is claimed. Meeting these needs should lead to activities supported by all members of the ecosystem: making sure that people and institutions with big money are around and do not miss the right investment.

Talent is already an issue. Attracting talents from abroad – which seems to be working quite well at moment, thanks to business immigration service – needs to be flanked by activation of “organic” home-talent. And this is not only a call for the universities, it is a call for the overall schooling system. We need to widen pupil horizons, make them become aware of future and personal possibilities.

Outlook

When talking to the people from the ecosystem I get the impression: Berlin is cool, Berlin did achieve a lot. The Berlin startup-ecosystem will do its next steps to an economically – and hopefully environmentally and social – sustainable future. And everybody is willing and happy to contribute to this effort. Any bottleneck or lack of activity is quickly addressed by the ecosystem. The public players see the startups’ potentials and definitively responsibly play their supportive role.