Berlin: the Startup Capital of Europe

Recently, at the invitation of Germany’s Federal government, 17 international media specialist in games, tech, music and startups visited Germany. The tour was designed to give first hand experience about the thriving tech and innovation scene in Germany. I was part of this 9th tour arranged by Initiative Musik, which was facilitated by the German Foreign Office.

The 6 day trip was punctuated with visits to different ministries and with representatives from leading industry, conferences and research institutions including  bitkom, Tech Open Air Berlin, the Fraunhofer Institute, re:publica, the Hasso Plattner Institute, gamescom, and the Maker Faire from Heise

startup in berlin

Startup visit in Berlin,     Image credit: Stefan Wieland

 

In Berlin, the first thing I noticed is that almost everyone spoke English, so communication was never a problem in this trip. We visited many startups and they all pitched in English. Berlin is also the city that first opened co working space in 1995 and our trip included a visit to a co-working space called Ahoy. A recent study cited more than 100 Labs / Co-working facilities and Incubators / Accelerators in Berlin. Germany has also quietly established itself as one of the most happening tech city in terms of VC deal making. Despite the buzz about Berlin, it seems like Paris is also eyeing to become tech hub of Europe. For example, one of the largest incubator in the world will be opening in Paris in 2017.

deal making

Source: http://www.ey.com/Publication/vwLUAssets/EY-Start-up-Barometer-2016/$FILE/EY-Start-up-Barometer-2016.pdf

 

As we immersed ourselves meeting these startups, the visiting media team quickly realized how little we knew about the thriving tech ecosystem in Berlin. When we usually talk about startup communities in the world, we often refer to Silicon Valley, Bangalore, Singapore etc. There is definitely a lack of awareness among startup communities about Berlin’s tech scene, but with the recent Brexit situation, Berlin has a very good opportunity to position itself as the tech hub in Europe.  In our six day trip, we visited cities like Berlin, Dusseldorf and Cologne. The experience was overwhelming in terms of information that we gained.

Electronic Start-Up Industry 4.0 in germany, country of innovation, Information Tour August 15 2016 Berlin, Photo: Stefan Wieland 2016

Startup visit in Berlin, Image credit : Stefan Wieland

 

Making of Berlin’s Tech ecosystem:  

The tech ecosystem is growing in Berlin for many reasons, but affordable office and living space is probably one of the most crucial point for the growth. In Berlin, yearly rent for office space is euro 264/ per square meter, compared to Silicon Valley is euro 525 and in London is euro 1250. So it attracts a lot of young tech talent from around Europe. The German Govt. is going to spend around 4 billion euros in next couple of years to build the tech infrastructure. For example of 3G connection around Germany is surprisingly not that great. Personally when I was using the data in my phone to connect to internet while traveling between cities, the internet often dropped to edge connection.

The Telco is under the Industry development ministry and they consider it part of their overall infrastructure development framework. They have also merged the cultural initiatives under Industry ministry which they use for country branding purposes. They call it creative industry. These two divergent groups work closely to develop the next generation of competitiveness for Germany’s technology development. I was personally fascinated by this strategy. I believe our govt should try to bring the two school of thoughts and do joint programs to promote Bangladesh.

After USA, Canada and Japan, Germany is eyeing to curve a top place in the gaming industry which is one of the most thriving industry in the world. They attracted one large gaming company called Ubisoft from France to setup an office in Germany. It helped to draw other smaller gaming companies to setup shop. The local tech universities started to offer programs and curriculum to draw talent and develop skill sets. In last 10 years, Germany is able to position itself as a gaming city and hosts several large tech and gaming events to bring people together and market their strong position in this field. We visited Gamescom, a trade fair for video games held annually in Cologne, Germany. The event is used by many video game developers to show case their upcoming games and game-related hardware. We were just overwhelmed with number of visitors that went over 50,000 and with rows of gaming startups, tech companies showcasing their latest games, some of them yet to be released. This gaming event made me see how virtual reality will be the next big thing in gaming and probably overlap business and regular social connectivity.

gamescon3

Games com                   Image credit : Christina Gilch

 

It made me think that Bangladesh govt. should start to think more strategically by bringing large foreign tech companies in specific fields it wants to build a capacity versus being very open ended in developing tech skill sets. It should also partner with universities around the country to offer special tech diploma programs. Given our large population, our focus should be vocational training and short diplomas to help our local talent to up skill and quickly transition to gainful employment.

However, I was surprised to see that German govt. does not provide any special TAX incentive to startups companies as the ecosystem is still growing. They have grant and program to support the founders, but nothing that directly supports startup businesses. In that respect, Bangladesh ICT ministry has shown great pragmatism to help in supporting our startup ecosystem through grant, accelerator program, office space and soon to be finished IT park.

 

Germany’s Tech policy and Govt Road Map

The German govt. has created a *digital strategy which outlines their road map to 2025.  Here are the key points:

  • Create a gigabit fiber-optic network
  • Launch the new Startup Era
  • Create a regulatory framework for more investment and innovation
  • Encourage smart networks in key commercial areas
  • Strengthen data security and develop informational autonomy
  • New business model for SME
  • Modernization of Germany as a production site by utilizing Industry 4.0
  • Create excellence in digital technology research and innovation
  • Introduce digital education to all phases of life
  • Create a digital agency as a modern center of excellence

*source: Federal Ministry for Economic Affairs and Energy

This digital road map will be followed regardless of change of government to ensure continuity of the road map, which intends to keep Germany competitive in the future. They get all relevant stakeholders to collaborate through annual conferences which includes members from policy makers, science, industry and civil society. Germany closely works with Tel Aviv and planning to work with few other countries to build special tech business relationships.

federal govt presentation      

Besides focusing on broader digital road map for the entire technology industry, they have also given special focus on young startups. Currently they have around 6700 startups in Germany and the base is growing. To support the young digital entrepreneurs they work in five key areas:

  • They foster entrepreneurship in IT startups
  • Focus on financing climate for startups through attracting VCs and crowdfunding
  • Match making with local Industry and startups
  • Linking German startups with other international startup hubs
  • Supporting entrepreneurs

I was very inspired to see many good examples how government can help the local tech eco system and I plan to work with our government to develop programs to recreate success stories for Bangladesh thriving technology industry. The trip was definitely an eye opener which has helped me to understand Berlin’s technology scene and put the city right on top of my most interesting place to visit.

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Group Photo of the visiting media team              Image credit : Christina Gilch

 

 

Mustafizur Rahman Khan

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