19.01.13

HY!Berlin

Why everyone is moving to Berlin

Berlin ist the place to be - for everyone, who wants to be successful. A guest contribution in the Berliner Morgenpost by Holger Lütters.

Lail Arad became one of these social media phenomenons with her song "Everyone is moving to Berlin". From a London perspective she felt that a lot of young, creative people pack their bags and move to Berlin.

The capital city of Berlin is a vital place for ideas and entrepreneurs from all around the world. The Berlin start-up scene is often compared with global spots which attract new ventures. Even though Berlin cannot compete with the Silicon Valley, Bangalore or similar places in size or growth is seems to be a creative ground for international teams. International teams settle in Berlin to take advantage of this spirit which gives wings to the formerly divided city.

Official statistics normally only include the activities of legally organized companies with a real office. A venture in its starting phase is never entering these statistics. So how to find out about those founders who do not even have the funds to afford the famous garage that apparently every successful company needs to have for a start?

In order to find out more about the Berlin start-up scene a survey was conducted by HTW Berlin (Hochschule für Technik und Wirtschaft – University of Applied Sciences) and the established business club VBKI e.V. (Verein Berliner Kaufleute und Industrieller – a start-up in the year 1879).

In a riversampling approach in partnership with the Berlin online platforms for start-ups, 357 companies were interviewed about their situation, their problems and their future. A closer look was given to the situation of the employees of the start-ups which give their heart and soul without being compensated adequately.

A summary of some central findings of this first closer look on the start-up scene in Berlin:

What are the reasons for these young entrepreneurs to try to set up something in Berlin?

Berlin is a comparatively cheap place for a European capital city. This includes office space and also private cost of living. Moving to Berlin is cheaper and easier than to other cities of the same structure in Europe. The large majority of the start-up managers states, that Berlin is a "cool place".

How international is Berlin in the start-up scene?

50% of the start-ups recruit their teams with an international background. English is the official first language used within already 14% of the Berlin start-ups. The majority of the start-ups is targeting international markets on a global scale. 2 out of 3 Berlin start-ups expect growth in the near future and are hiring. The war for talent has begun.

How are Berlin start-ups organized?

Most of the founding teams start in duos. Male founders dominate the scene. The majority of the start-ups works in a very small sized idea of a company with less than five co-workers. Some ventures do not even have a single employee but remain on the level, where an idea might become a project.

More than 50% of the start-ups are organized in the legal form of a German version of a limited reliability organization (German: GmbH). In comparison with other countries the foundation of such an organisation is quite complicated and more expensive in Germany. This might be a reason why some 20% of the starting teams do not have a legal form that protects them from liability charges. The team members dare a lot when jeopardizing their future without a guarantee of success.

40% of the companies are hiring with time limited contracts. Interns are more common within larger corporations. 20% of the start-ups suffer from higher fluctuation of employees.

Most of the Berlin start-ups still wait to become successful. The yearly turn-over is under 100.000 € for 46% of them. 31% claim that they are challenging survival of the idea. Seeing that the teams are often working overtime without adequate compensation, a lot of enthusiasm is needed. All start-ups are looking for new team members in the field of technology development and in sales positions. Berlin apparently helps keeping the team spirit high. A large majority asked state that working in a Berlin start-up feels like heaven.

Who is financing the start of a venture?

The classic venture starts with a small budget underneath 25.000 € brought together by private investors. Financing the company remains a permanent task for the first years of activity.

What is a more attractive part of Berlin for the entrepreneur?

Start-ups can be found all over Berlin, but a concentration can be found in the area Mitte/Prenzlauer Berg in the central eastern part of the city. Garage is more a shared apartment where one of the rooms becomes an office and still allows couch-surfers to sneak in for a while

49,6% of the start-ups cooperate with Berlin universities. The Berlin universities help to facilitate the cooperation between researchers and entrepreneurs. These cooperations help to find the entrepreneurs of tomorrow.

Over all it seems to be very attractive to work in a Berlin start-up. Even without a guarantee for success the chance to collect experience can't be better. Not all of the experience will be job related. Lail Arad also describes non-job related experiences in the internet community. "I've discovered it's the bloggers who can kiss". This finding is not covered by the HTW Berlin study. So move to Berlin and find out yourself!

Prof. Dr. Holger Lütters is the programme director of the Bachelor International Business at HTW Berlin and created the survey together with VBKI. The study can be downloaded under www.vbki.de

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