28/06/2016

Brexit: an opportunity for Berlin to grow

By Wilhelm Lappe Berlin, insights 0 Comments

It’s the perfect moment to keep talking about the Berlin Startup scene. This week some news (info in German, and more) indicates that Berlin could benefit from the British Brexit. This is a real opportunity for Berlin, but I guess it’s not going to happen immediately.

In the long term there are some problems. Many companies operating from Berlin are incorporated in London. The market could shrink, and Europe vs USA competition is more difficult today for Europeans. The European market could be reduced and get more complicated for actual business. But in the medium-term I’m sure UK will be close to the EU market and the complications will be reduced.

Because of this, I think many companies will be focused on solving the current problems before thinking about strategy. And the move of companies from London to Berlin is not going to happen this year. Also the freelancers are probably not going to have problems with their residency visas, I guess. But f that happens, they can move fast.

At this moment nothing is clear, and it will take several months to really know what’s the process, the new situation, and the implications. During this time no one is going to make radical decisions.

But for the ones who are now deciding where to move the situation is different. I’m sure today nobody is thinking about moving to UK to create a company there until everything is clear. So for the ones deciding between London or Berlin, the decision will be clear. I expect a progressive arrival of companies in Berlin that today are not yet in either one of these places.

I think this will also affect the forecastings for next year. Probably the money for investment will be higher in Berlin and I bet some international accelerators will start running their programs in Berlin in the next months, probably as a trial for a definitive movement. That could also happen with funds and investors. Here, some of them like Techstars or Startupbootcamp, will use their experience in Berlin to take a small advantage.

We already talked about the movement of big German companies creating labs for innovation in Berlin. This is a good idea for British companies thinking about Berlin in the medium-term range.

In the finance and bank sector, Frankfurt is also positioning itself to attract “the City”(more info in German). This makes sense, but don’t forget Dublin with fiscal incentives and the same language. If Frankfurt attracts it, it will also be positive for Germany, with the possibility of creating two connected hubs in Germany. This will be the perfect balance between old and new economy in Germany, but probably will withdraw power from Berlin.

Berliners are quite happy about this possibility, mixed with some fear about the future of Europe. I think it could be a great opportunity for Berlin and Germany. Also there’s a preoccupation when we think about rich workers from London (in comparison with Berlin) coming here. Definitely Berlin doesn’t want to have the lifestyle that London was getting in the last 3-4 years, but that’s probably something difficult to stop. Maybe a compromise solution will be found, or the process will last years and we will adapt progressively to it.

Let’s see what happens over the next few months, but I’m sure the interest in Berlin will increase. We will see more people coming, and some spots from accelerators, investors and big companies appearing in Berlin.

I guess now the race between Berlin and London for being the European startup hub has a serious contender. I bet it will be Berlin in 2017 and even clearer in 2018.

But for now it’s the perfect moment for you to read my recent articles about Berlin and stay tuned for updates.

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