Where To Start A Company: Berlin vs London
Martin Varsavsky
Chairman of Inception Prelude Fertility, Overture and Gameto. MVB Fund, CEO of Jazzya.
Berlin has low rents, low housing costs, lower salaries, a high quality labor force, great engineers and it is a fun and creative place. It would probably lead Europe if it weren’t for some key drawbacks. Compared to London, Berlin has two big negatives: access to funding and a tax/labor framework that fails to recognize the uniqueness of start ups.
The natural aversion of Germans to risk makes it hard for their financial system to find a good way to consistently finance failures. And as Silicon Valley has shown, you need a financial industry willing to finance failures until the successes come. While the British themselves do not have amazing VC firms willing to take American style risks, the largest US VCs go to London and pump the eco system up. Even the Continental European VCs like Atomico go to London because the UK also has the best tax/legal regime for start ups. Moreover, the new tax and labor law in the UK makes it easier to give stock options and hire and fire, which is in the nature of start ups. Start ups try talent out as frequently as they try themselves out. So even if salaries and rents are higher in London, financing and the ability to “try things out” make London a more favorable place. And as cosmopolitan as Berlin is, the German language is still a barrier for many who have not grown up with it.
I see good prospects for both cities but if I had to bet on the winner, I’d choose London to follow Silicon Valley and NYC as the third best start up hub. While Berlin has some of the qualities that a city needs to attract start ups, London, although behind the USA, still has more of what it takes to compete with its American counterparts.
Senior Inside Sales Lead @ LTIMindtree l Industry 4.0 l Founded 'Gift A Smile', a community to serve underprivileged children of the society.
7yJust wanted to share that CEO of Indusnet is visiting London this week. Would love to explore if we can meet to explore some opportunities. Thanks.
Language is a big barrier to many EU companies for a person not from that language. English is the common denominator, but I would have trouble imagining people form Bulgaria going to Berlin vs London. London has a much more global doorway. But ultimately if there were no barriers, such as visa's and legal, I think the highest probability for success is California hands down. Anyplace else, unless you are targeting the local market itself, will be a lower % of success IME.
Strategy Director at AIM Group
11yGreat arguments! However, one needs to separate location of business entity and location of business operations and market focus. I constantly run into German startups coming to London to raise funding (and probably set it up so that legal entity receiving investment is also a UK company), but targeting Germany as their primary market. And thus having operations and business development, top management and often development teams in Berlin. Targeting UK as primary market is risky, as this is 2nd or sometimes 3rd (after Canada) market all US startups will expand into. UK startups have to face much larger and better-funded US competitors rather early. Germany, having a larger internal market and stronger language and cultural barriers, is usually much further down their priority list, which gives Germany-focused startups enough time to build momentum and revenues, and often even grab neighbouring markets of France, Italy etc before big US boys arrive. And this usually results in an acquisition and great exit for investors for German startups (think Groupon - CityDeal, Ebay Germany, Mobile.de and numerous others). So my take - why choose? Have both - combine advantages of both European tech capitals to build a great startup!
Female digitale entrepreneur, HR director, French translator, French trainer
11yHi! Very good article. I thought the best cities to start a business in Europe were London and Francfort. L.Boisdur-Salbris
Owner manager at Gladstone Elelectrics
11yRichard would say this. Why would he speak against his own home town? Klaus, born in Berlin.