Berlin is the New “Start-Up City”: Main Questions about Business in Berlin
For entrepreneurs approaching Berlin for the first time there are some recurrent questions, knowing it will help you to improve your results in the city:
Do I Need German?
No, at least for start-ups. The ecosystem is international, and the main language is English. Ironically, in Berlin is not easy to speak German
If you’re doing B2C and marketing to “normal people”, you’ll need to write ads and websites in German. A translator could serve for a particular marketing campaign, but for medium-long proposals, you’ll need a local agency, and maybe hire a local employee (sometimes an intern) to do this job.
If you are doing B2B with industrial agencies outside of Berlin, then you will need German. Most likely, many contacts and the bureaucracy will speak German.
Should I incorporate a German Company? Is it easy?
No, it’s not mandatory and it is not easy. If you have a legal entity in another country, especially if it’s a nation in the European Union, you can invoice and pay bills without many problems..Don’t forget that you can remotely incorporate the company in places like Estonia.
Incorporating a GmbH (LTD) is not easy. A deposit of 25K, with half in a bank, is needed, the small version UG doesn’t need it, but with the profits, you save the 25K deposit.
Bureaucracy is in German and not easy. Taxes and social costs are high.
For example: If a klasse 1 (single with no children) worker’s salary is €3,000.00, after the employer deducts the federal taxes, the Worker is usually left with a Take-Home amount of around €1,932.78 leaving his company with a cost of around €3,581.25.
When finding an accountant, speaking English is not difficult, however, someone understanding several countries tax systems at a time is quite complicated.
Can I get an investment or join an accelerator?
Private investors are investing around the world, but being in Berlin is an advantage. You can meet them, and keeping in contact with them will be easier.
Being with your contacts is not limited to the workplace. Having a coffee or attending events will make you understand the mindset better.
The situation with accelerators is similar, they accept many international projects, but being in Berlin makes contact easier, as well as give you the chance to meet alumni members.
Some public investors and accelerator programs who work for bigger industries, only accept German companies. If the accelerator takes equity, they will prefer well known local countries (Germany, UK, USA) over others…(Spain or France).
Sometimes, there seem to be more accelerators than startups, meaning there are more real chances to join one if you project makes sense and its aligned to the accelerator. Most of them are focused on a sector.
So, why Berlin?
There is talent, money and an initial market.
Having the talent in the city doesn’t mean that it’s easy to hire or cheap to pay, but the mindset is the right one. You can be in contact with people doing relevant business and surrounded by great projects.
If you are going for something new here, it will be understood and appreciated. The ‘standards’ are higher here than in other places. It involves design, technology, pitch, teams, etc…
The teams and mindset are international, if you are coming from a “local ecosystem” it can give you a value. Equity, investment, rounds, valuation, vesting, etc… Everything related to startups is commonly accepted and it makes every day move faster.
The feedback is honest and the meetings are short and decision-oriented. It allows you to evaluate your product and understand the market fast and invalidate. However, closing a deal with a big German company is different, it takes time.
The key is offer value, be transparent with the proposals and generate confidence and trust. You’ll be accepted, it doesn’t matter where you come from.
There are about 5-10 meetups every day and 5-10 big events annually that can be used to build a network.
Lifestyle
Starting in Berlin is easy, it’s a cheap city with a good quality of life. Of course, March through April is better while winter it’s…dark, the cold doesn’t matter. What affects your humor is the lack of light.
Establishing a permanent residence here would be more complicated, especially when finding a home, a Kindergarten for kids or anything that involves the German Bureaucracy. Then again, starting a new life in a month anywhere is never easy.
People are open-minded, and creating the first contacts is easy, but stable personal relationships are not easy to establish because many people here are visiting for a short time, four months at the longest. People that are here longer have regular plans that you could attend, if you don’t travel so much, but are part of groups that are not easy to enter into.
Berlin is definitely the place to visit if you are in the startup or digital business area. Spending a reasonable amount of time here or coming frequently is a great idea, and eventually, you might stay here long-term.
