'Raw and Direct': The Growth of Berlin into Europe's Start-Up Hub

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Web developers from around the world are converging on Berlin, with the German capital becoming a significant center for tech start-ups. In a new series, SPIEGEL ONLINE will scratch beneath the surface to find out more about the people, companies and ideas responsible for the buzz. Is Berlin about to take off, or will it be a repeat of the dot.bomb?

A Silicon Allee Breakfast meet-up for Berlin start-up entrepreneurs is held each month at the Sankt Oberholz cafe, one of the hubs of the local tech scene. Zoom
David Knight / Silicon Allee

A Silicon Allee Breakfast meet-up for Berlin start-up entrepreneurs is held each month at the Sankt Oberholz cafe, one of the hubs of the local tech scene.

With cafes serving up lattés for breakfast on nearly every corner and after-hours clubs with DJs spinning well into the next afternoon, drawing people from around the world, Berlin is buzzing. That's been true for some years now. What is novel, though, is the onslaught of entrepreneurs and programmers from around the world who are descending on the hyped capital city to establish their own tech start-ups.

Attracted by the city's creative class, its world-class culture, a rich alternative scene and its affordability, more and more tech entrepreneurs are setting up shop here. They meet up in "shared working spaces," at regular start-up gatherings like the Silicon Allee Breakfast meet-ups organized on Facebook as well as almost legendary watering holes like St. Oberholz where iPads are as ubiquitous as beer or coffee. Berlin is currently home to dozens of Internet start-ups, with some observers estimating that more than 100 such companies are based here. Whatever the figure may be, it is clear the city has shot ahead of other German tech hubs like Hamburg, Cologne and Munich as the favored destination for people in the country with Silicon Valley ambitions.

In the coming weeks, SPIEGEL ONLINE International's reporting team plans to fan out across Berlin to get a better picture of a city that has become the successful home to companies like fast-growing SoundCloud or social video games developer Wooga and an incubator for up and coming ones. In a small series, we plan to share the stories of young start-ups as well as the faces and ideas behind them.

Ironically, the hype surrounding Berlin has actually created less of a splash in Germany than it has abroad. It gets occasional coverage in papers here, with headlines like, "Cooler than New York," but not the kind of attention it seems to be drawing from the tech scene abroad. Technology and Internet reporters from the rest of Europe and the United States have been reporting on the surface of the scene for some months now, and they have also helped to raise awareness of the new tech hub taking shape.

'A European Portland or Austin'

  • In August, CNN Money declared that Berlin is "fast becoming Europe's hottest start-up hub."

  • Wired UK described Berlin as one of "Europe's hottest start-up capitals," ranking it favorably next to London and Amsterdam.

  • Influential blog TechCrunch hailed the city's start-up scene as ripe for takeoff. "There's no question London has a much more advanced, sophisticated start-up ecosystem now," an article stated. But it also added that Berlin is a more natural gateway than other Western European capitals "between Europe's mature Western economies and the surging talent in Eastern Europe." The city's creative class, it added, is largely made up of outcasts. "It's become the place where misfits in Europe -- people who want to be artists and creators, people who don't fit in rigid social structures of cities like London -- flock to do what they want. ... If London feels like a European New York; Berlin feels like a European Portland or an Austin or a Boulder. And perhaps one day a European San Francisco."

  • The tech site Next Web was impressed by the design of iPhone, iPad and Web apps designed in the city, many of which were described as "world-class gorgeous." It added, "many apps from Berlin seem to have that extra something, and even though you may not have heard of many of the latest generation of start-ups based in the city yet, if you try their products, you'll see a flair for design shine through."

  • In Germany, the Net Economy column for the Frankfurter Allgemeine Zeitung newspaper asked German investor Klaus Hommels, a former investor in companies like Skype and Spotify and now the head of start-up incubator Springstar, how and if Berlin could become the Silicon Valley of Europe. His response? It is probably a question of when rather than if.

  • Meanwhile, the Silicon Allee blog -- a play not only on the California epicentre of the tech industry, but also on the many back-alley tech start-ups that characterize the Berlin scene -- follows the start-up developments in Berlin through the lens of a handful of expat transplants connected with the local tech industry.

  • And what better place to check the pulse of the Berlin start-up scene than on tech forums? Dozens of stories have been exchanged on the trials and tribulations of people looking to the German capital and explaining why they are moving to Berlin in order to transform my idea into a successful Internet company.

But why Berlin? The reasons are manifold. The city has a flourishing creative scene -- and not just when it comes to the Internet and computers. Berlin offers a high quality of life, relatively modest living expenses. The city has excellent transportation -- both local as well as autobahn, air and rail connections to other German and international destinations. Besides, the city is home to both start-ups as well as their potential clients. The buzz surrounding Berlin is almost like a self-fulfiling prophecy: The city is a meeting point for the creative elite precisely because it is the kind of place where the like-minded creative class indivduals converge and quickly build networks based on mutual interests that quickly grow and prosper.

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