The New Start-Up Mecca

There is Silicon Valley, Silicon Alley and then there is Silicon Allee – Berlin’s digital start-up scene. Every 20 hours a new company is established here making Berlin Germany’s start-up capital. Rivaling London and Tel Aviv, Berlin has become one of the hottest places to be for international investors, incubators, entrepreneurs, programmers and designers in the digital economy. Although not quite as successful as its American counterparts on a global scale – Google, Ebay and Facebook did not exactly originate in Germany – Silicon Allee has nevertheless turned out some big names. Among them, e-commerce heavyweight Zalando with six international spin-offs, web gaming giant Wooga known for popular games like Diamond Dash and Jelly Splash, and the world’s leading audio sharing platform SoundCloud.
So when Jong Hwan Lee, a Korean eSport entrepreneur, was looking for an international market located in a convenient time zone somewhere between Asia and America, Berlin was his natural choice. “eSport is very established in Korea, but to make it internationally with our gaming alliance ESGN, we needed to find a home for our company in a more accessible market with potential for growth. We chose Berlin because the city has become a start-up mecca over the past few years attracting creative people from all over the world and is equipped with good infrastructure,” says Lee who hopes to make eSport as trendy in Europe as it is in Korea, where top computer gamers are celebrities. ESGN is desSilicon Valleyigned as an umbrella organization uniting eSport publishers, gamers, leagues, and spectators. Lee and his team have even opened a full-fledged web TV studio in nearby Potsdam to create video content – from news and live eSport-casts to background information and features – for their brand’s Internet TV channel ESGN TV.
“What makes Berlin so attractive is a mix of factors,” Lee says. “By comparison the cost of living and availability and prices for office space are very affordable. The city also offers an international environment and opportunities for co-operations with local universities, which attracts many young people to the city.” In addition, the density of pubs, clubs, and cultural offerings is a key factor contributing to Berlin’s success in the digital economy where you don’t have to speak German to find a job. After all, web start-ups depend mainly on employees, and these cool, young, creative people are generally found in hip urban locations. With tech salaries comparable to London and the cost of living 40 percent lower, many talented developers and designer are flocking to Europe’s party capital Berlin. In other words: “more booze, more biz.”

University financiers and digital natives

A look at the exact location of Silicon Allee within the city proves the point. There are tech clusters in the peripheral area of Adlershof where the Humboldt University has a campus and the city has been pumping resources into a science city called WISTA as well as along the river in an area called Media Spree where Universal and MTV have their headquarters. Another start-up cluster has evolved in the vicinity of Berlin’s Technical University in what is called City West. But the highest density of Internet companies, web designers, and app developers can be found between Schönhauser Allee and Torstraße in Prenzlauer Berg and Mitte – right in the middle of Berlin’s most vibrant cultural and culinary hot spot. So Silicon Allee is quite appropriate.
It is here, on Torstraße, that digital natives meet at a coffee shop called Sankt Oberholz to exchange ideas and find business partners over a homemade sandwich or a slice of New York cheese cake. They bring their laptop computers and surf the web for free. And when they start a business or just need more room to sit and work, they join Sankt Oberholz’s co-working space and move upstairs to a desk. Co-working nourishes the seed for many creative ideas and co-working spaces have become a vital part of Berlin’s start-up scene. While some desk spots are rented out permanently in private offices shared by creative people of all trades, some are more flexible or come with access to conference rooms, lounges, and a coffee bar. One such co-working space is Betahaus in the heart of Kreuzberg, which not only offers room for new ideas but also supports its members with a whole array of events and community activities.
While Berlin’s entrepreneurs and established tech companies alike have no trouble attracting generation Y programmers from around the world, finding venture capital (VC) is more challenging – Germans are not exactly known for taking risks. As a result, Berlin based start-ups make it through the initial launch phases but when it comes to growing up and making it big internationally, they lack the financial backing to do it. So unless more VC – German or international – flows into the city, it’ll be quite some time before companies like Blacklane Limousines, Math 42 or Flexperto can rival the likes of Amazon and Instagram.

Photo Credit: JVG

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