Berlin is the New “Start-Up City”: Market and Trends: Why? How? Who?

I wrote about this topic some time ago, but it’s a good moment to summarize and update.

Germany is an attractive place to start a company with Berlin leading the way. However, the Startup ecosystem did not occur overnight. Today, Germany has around 1800-3000 startups, 50+ accelerators, and 400+ active angels with investments growing every day.

In 2017, Berlin continues to be the hotspot for the German startup scene and is expected to grow for the next few years. With 208 Berliner companies invested out of 475 companies receiving investment in Germany, the city is leading it. This results in almost 3000 million euros investment in startups. In Berlin the most popular areas are e-commerce, Software&Analytics, and Health startup companies.

History:

The history of Berlin’s startup ecosystem could be divided into three phases…

The Crash and Aftermath (2001-2007)

Prior to the turn of the 21st century, a huge economic speculation called the “DotCom Bubble” emerged around 1997 that promoted a period of growth, usage, and adaptation as a result of the launch of the internet. However, after the crash of the 2000s, only a few founding companies survived.

For many others, the 2000s were tough and there was no money coming from the business angels. However, a select few companies pursued and would later become pioneers of the current ecosystem. Many of these companies included Trivago (2005), Zalando (2008), Spreadshirt (2002), BigPoint (2002), InternetStores (2003), etc…

The emergence of Digital Industry (2007-2014)

With the success and revenue of the companies that emerged from the crash, a new foundation was paved for a new business angel ecosystem allowing many more companies to be formed. It overall restored the confidence that money could be earned with German start-ups.

This attracted many TOA and other conferences to move to Berlin around 2011 due to the booming e-commerce, marketplaces, and lead generation industries.

The Internet Industry (2014-today)

Berlin has become the largest digital hub in Europe, especially with financing, number of companies, and popularity. It’s has a consolidated ecosystem and the model is very professional and money demanding. The “new things” are related to the relationship with big companies, their interest in startups, and the different ways they are collaborating and connecting to convert the “old economy” into the new one.

Who are the main players?

The ecosystem contains everything what you usually find:, relevant startups, investors and accelerators and something quite relevant, accelerators, innovation labs and similar from big companies, looking at startups as an innovation wave and working together with them. Let’s mention some relevant examples of each category:

Companies: A common pitch or startup project that thrives or fails.

• Auto1: The online marketplace for efficient buying/selling of inspected used cars.
• DeliveryHero: An online platform where people can order food and have it delivered.
• GoEuro: A place to find a cheap bus, plane, and train tickets to anywhere in Europe.
• Zalando: Europe’s largest selection of fashion and trends.
• RocketInternet: Provides support to entrepreneurs and builds market-leading companies.

Investors:  Places that provide funding to startups in return for good products and profits.

• Earlybird & Heilemann Ventures: A startup venture capital investor focused on technology-driven, European innovative business models focused on SaaS and lOT enterprise (1.2B USD).
• Partech Ventures, Partech Growth: An investment platform for tech and digital companies (1.4B USD).
• Fly Ventures, Early-Stage Venture Capital: A seed-stage venture capital company that builds transformational, intelligent software to drive business automation (41M USD).
• Project A: An international venture firm that funds seed, early-stage, and Series A phases for start-up companies focused on SaaS, e-commerce & Marketplaces, digital infrastructure solutions (EUR 260M).
• e.Ventures Early Stage Fund: The leading venture capital fund focused on Series A phase startups, backing Saas, Mobile, and Open-Source sectors (420M USD).

Accelerators: Programs that provide training and mentoring to promote the growth of a startup.

• Startup Bootcamp: Supports early-stage tech founders to rapidly scale their companies through direct international network access.
• Techstars: An American seed-accelerator that’s dedicated to helping entrepreneurs succeed.
• Founders Institute: The world premier idea-stage accelerator and startup launch program.
• Hardware.co: Dedicated to the creation of innovative hardware companies and products.
• U-Start: Startup program that promotes circular economy, climate protection, and resource efficiency.

Digital Labs: founded and supported by corporations, they are collaborating with startups in their sectors looking for open innovation, talent and to do projects faster and in a more collaborative way that they use to:

• Porsche: Based out of the heart of Berlin, Porsche along with its subsidiary, MHP has been operating an innovation lab since September 2016 known as Digital Lab. Here, the tasks range from trend scouting to brainstorming the construction of IT prototypes.
• DB: At DB Mindbox, some challenges include looking for both technical-mechanical and ICT related solutions and new approaches to services and business models in the context of digitalization.
• AllianzX: As part of a digital investment for the Allianz Group, AllianzX’s goal is to identify and invest in the best digital frontrunners by providing an interface between portfolio companies and the digital ecosystem across the global lines of business.
• Commerzbank: Also known as the ‘Comdirect Startup Garage,’  Commerzbank aims to focus on founders and their idea’s at an early stage through the participation and development of a prototype. Commerzbank also invites startups to pitch in in their co-working space with Fintech ideas.
• Collaborator: (Bayer) Offers prospective companies with fully-equipped, functional laboratories and office spaces at competitive rates. They also adapt the installed laboratories to meet the customer wants and needs for its individual clients.

And after understanding the origin of the ecosystem, you can follow these relevant players. On the other hand, why not, visit Berlin? It’s a welcoming place full of events, meetups, and coworkings where you can spend some weeks to know from first hand what’s happening here.