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Blog | 15. Mai 2017

BERLIN IS A HAVEN FOR FOREIGN START-UPS

“Just imagine: You are a start-up founder in the USA. Everything is wonderful. And then Donald Trump gets elected. What’s your next move? You take your new company and move to Berlin.” When Christoph Sollich comes out with a statement like this in front of a live audience, he knows he’s going to elicit laughter. But this Berliner’s mission is about much more than just entertaining people. As a “pitch doctor” he supports company founders throughout their businesses’ start-up phases. He has recently noticed a growing number of foreign entrepreneurs among his clients. These include Americans who fear that Donald Trump will restrict the flow of international talent into Silicon Valley by tightening immigration regulations. They also include founders from London who are looking to move to the continent because they are worried that Brexit will mean an end to freedom of movement, increased import duties and more stringent export restrictions. It is the nascent finance industry that faces the greatest challenges. After all, a majority of these FinTech companies have British banking licenses, which probably won’t allow them to do business across Europe in the future.

A PLENTIFUL SUPPLY OF CAPITAL – AND EMPLOYEES

Berlin is the top pick for migrating start-ups and the vibrant city’s multicultural environment plays just as strong a role as the ready availability of capital. Special loan financing for venture founders are an established feature, including those provided by the IBB Investitionsbank, which target newcomers to Berlin’s start-up scene. Then there is a network of private firms who broker venture capital, and business angels who grant loans to new businesses. The federal government has set up two funds to support company founders, and the state-funded development bank, KfW, is putting together a large pot of money to provide post start-up refinancing. So it should come as no surprise that, according to a new PwC survey, 90 percent of Berlin’s start-ups are totally happy to have chosen the city as their base – especially as they are able to tap into a larger pool of qualified and motivated young employees than anywhere else. While 73 percent of start-ups across Germany as a whole complain that they struggle to find the employees they need, the figure is significantly lower in Berlin, at a more modest 63 percent (source: PwC)

What’s more, there’s another major competitive advantage, especially for FinTechs: Germany’s financial regulator, the BaFin, doesn’t just stick to implementing the latest EU regulations. Start-ups in Germany are always well aware of upcoming issues because the financial regulator checks whether they need to be licensed for the services they provide or not. It’s a system that provides planning security for company founders – and creates confidence for investors.

OPEN TO THE WORLD – AND AN AFFORDABLE PLACE TO LIVE

There are lots of good reasons for international start-ups to move to Germany, and more specifically Berlin. The German capital is, after all, the beating heart of the new generation of successful company founders. McKinsey, the global business consultancy, has forecast that start-ups will create more than 100,000 new jobs in Berlin by 2020. Berlin clearly knows how to impress young, international talent with its vibrant and cosmopolitan attitude to life. Berlin stands tall, even in direct comparison with London or San Francisco. In fact, there’s one thing Berlin has that no other attractive, global metropolis can offer – affordable housing. The average rent in Berlin is currently just over EUR 10.00/sqm per month, which equates to roughly EUR 600 to 700 per month for a medium-sized apartment (before utility bills). In stark contrast, renters in London pay an average of EUR 2,000 per month for a 60-70-sqm apartment – not including heating costs and other bills – which is almost three times as much.

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Blog | 15. Mai 2017

BERLIN IS A HAVEN FOR FOREIGN START-UPS

“Just imagine: You are a start-up founder in the USA. Everything is wonderful. And then Donald Trump gets elected. What’s your next move? You take your new company and move to Berlin.” When Christoph Sollich comes out with a statement like this in front of a live audience, he knows he’s going to elicit laughter. But this Berliner’s mission is about much more than just entertaining people. As a “pitch doctor” he supports company founders throughout their businesses’ start-up phases. He has recently noticed a growing number of foreign entrepreneurs among his clients. These include Americans who fear that Donald Trump will restrict the flow of international talent into Silicon Valley by tightening immigration regulations. They also include founders from London who are looking to move to the continent because they are worried that Brexit will mean an end to freedom of movement, increased import duties and more stringent export restrictions. It is the nascent finance industry that faces the greatest challenges. After all, a majority of these FinTech companies have British banking licenses, which probably won’t allow them to do business across Europe in the future.

A PLENTIFUL SUPPLY OF CAPITAL – AND EMPLOYEES

Berlin is the top pick for migrating start-ups and the vibrant city’s multicultural environment plays just as strong a role as the ready availability of capital. Special loan financing for venture founders are an established feature, including those provided by the IBB Investitionsbank, which target newcomers to Berlin’s start-up scene. Then there is a network of private firms who broker venture capital, and business angels who grant loans to new businesses. The federal government has set up two funds to support company founders, and the state-funded development bank, KfW, is putting together a large pot of money to provide post start-up refinancing. So it should come as no surprise that, according to a new PwC survey, 90 percent of Berlin’s start-ups are totally happy to have chosen the city as their base – especially as they are able to tap into a larger pool of qualified and motivated young employees than anywhere else. While 73 percent of start-ups across Germany as a whole complain that they struggle to find the employees they need, the figure is significantly lower in Berlin, at a more modest 63 percent (source: PwC)

What’s more, there’s another major competitive advantage, especially for FinTechs: Germany’s financial regulator, the BaFin, doesn’t just stick to implementing the latest EU regulations. Start-ups in Germany are always well aware of upcoming issues because the financial regulator checks whether they need to be licensed for the services they provide or not. It’s a system that provides planning security for company founders – and creates confidence for investors.

OPEN TO THE WORLD – AND AN AFFORDABLE PLACE TO LIVE

There are lots of good reasons for international start-ups to move to Germany, and more specifically Berlin. The German capital is, after all, the beating heart of the new generation of successful company founders. McKinsey, the global business consultancy, has forecast that start-ups will create more than 100,000 new jobs in Berlin by 2020. Berlin clearly knows how to impress young, international talent with its vibrant and cosmopolitan attitude to life. Berlin stands tall, even in direct comparison with London or San Francisco. In fact, there’s one thing Berlin has that no other attractive, global metropolis can offer – affordable housing. The average rent in Berlin is currently just over EUR 10.00/sqm per month, which equates to roughly EUR 600 to 700 per month for a medium-sized apartment (before utility bills). In stark contrast, renters in London pay an average of EUR 2,000 per month for a 60-70-sqm apartment – not including heating costs and other bills – which is almost three times as much.

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