Blog Post

Forget London v Berlin: Euro startups must join forces

Is Berlin the new Silicon Valley? This rather reductionist question was the subject of a nonetheless worthwhile debate between Passion Capital’s Stefan Glaenzer and Brooklyn Bridge Ventures’ Charlie O’Donnell at the NEXT conference in Berlin on Tuesday.

Both investors had some good insights — first and foremost, that there is only one Valley.

“The Valley has been around for several generations and the idea of replicating that is just not going to happen,” O’Donnell noted. No argument there. Trying to recreate other people’s success is not the way to be successful.

So let’s redefine the argument, O’Donnell suggests: “The most important is, ‘Can I build my company here?’ You need enough people to create a market for funding, you need enough talent and you need some good ideas and a place to set up your office.”

A couple of elements in Berlin’s favour:

Density (O’Donnell): “The necessary thing about the startup ecosystem is the ability to get educated very quickly. If you’re a first time founder, you may never have hired anyone before and so on. The really successful entrepreneurs learn the fastest, and the best ecosystems are where they are open and they share learnings.”
Intensity (Glaenzer): “The ability to execute is unparalleled in the German DNA. Out of this whole copycatting thing, in the last 18-24 months we’ve seen, for the first time, a force out of Europe. Whether it’s Rocket or Project A or Team Europe, I’ve only seen one place more intense, and that’s the cloning factories in Beijing.”

On the downside, O’Donnell said, German investors are not willing enough to fund new ideas – instead, they prefer relatively low-risk clones.

But Glaenzer, a German who’s been operating out of London for more than a decade, is (perhaps unsurprisingly) upbeat about Berlin’s chances. He reckons the city can live up to the hype because it’s ideally located to draw on the various strengths Europe has to offer.

“We have hungry IT talent in Eastern Europe, fantastic capital in London and fantastic executional power in Germany,” Glaenzer says. “My ideal would be to have a Brit heading up business development and a Swede as CEO.”

That’s a really interesting point, and one that O’Donnell echoed to some extent: “In the New York example, New York is better when the Brooklyn community is better and the creatives cross the river. There’s no reason why your capital can’t come from one place and your expertise from another.”

That’s what it comes down to. Let’s not be naïve here — a startup that’s based somewhere that lacks any capital will probably want to move somewhere that does. But what’s wrong with taking different elements of your business from different places?

When it comes to digital business, the whole debate over ‘X is more likely than Y to replicate the Valley’ is dumb, not just because a resolution is impossible, but because territories just don’t matter that much anymore. Talent is mobile, money is mobile, the web is global and people can work together with anyone, anywhere.

Artificial competitions are fun, but only for so long. So let’s move on. Berlin has the density and the intensity — now it just needs to be the best it can be. And the same goes for everywhere else.

2 Responses to “Forget London v Berlin: Euro startups must join forces”

  1. Stefan Brunner

    I am a German-American with anchors in Berlin, living in Austin. I am weary of the hype. First, in my opinion plagiarism does not create an entrepreneurial culture. And those copy/pastes are not even high quality. We are not talking about getting “inspiration” and adding on for something better – the next gen. We are talking about cheap plastic imitations. The China reference fits, though China is growing up slowly.

    Second, the entire amount of VC funding combined in Germany is less than that of even a single moderate player in the US. A long cry from getting serious.

    The German Startup culture appears like a child making its first toddler moves. Needed is a grown-up culture. In addition to the points I already made, the legislative and judicative has to adapt to online reality – talking about the “Abmahnwesen” and the silly discussion about copyright, including market-preserving actions of the dinosaurs, eg in the case against the innovative Tagesschau. Instead, if the Dinosaurs truly want to survive, they should feel inspired by the few people with innovative power in Germany and embrace with open arms people like the Tagesschau team and learn. And what is up with “Abofalle” and such? Or are we considering scams as part of the start-up culture? How should the German consumer trust the Internet? We need decisive legislation and enforcement.

    True, Germans are educated and can move efficiently at times – when it does not involve risk. And yeah, Berlin is way more fun than Austin or the Bay Area – and I lived in all three places. @TechStefan

  2. Kristoffer Lawson

    OTOH I do see a certain value in an attitude to compete, up to a point. It drives people, countries and policies forwards. So while London or possibly Berlin might make sense for Holvi as a financial startup, we are also proud of our Finnish heritage and the very high level of technical skills here and in the Baltics. We want to be a part of developing the ecosystems here and to push hard to continue the stream of successes we have seen in this particular geographic area.

    Friendly competition is good.