Buzzing Berlin

Germany’s capital provides a vibrant and inspiring setting for internet start-up companies, finds Liat Clark.

Berlin is not beautiful in the traditional sense, its sprawling city limits dominated by grey post-war architecture. Head to one of its heaving cafés or bars, though, and it soon reveals its USP.

The infamous club culture has attracted an influx of bright young things from across Europe, escaping their unemployment woes and eager to make something of themselves in a city where entrepreneurship is second nature, in a country that is one of the most politically and financially stable on the continent.

“You see them sitting with their Apples in a café – they’re not wearing a tie, stuck in an office,” says Burkhard Kieker, chief executive of Visit Berlin. He is referring to the new tech-savvy generation that has been turning innovation into profit, launching new internet start-ups from their studio apartments every week.

Germany’s financial security is founded on exports – last year it broke the trillion-euro mark – including steel and car manufacturing. But in its capital, where traditional industry has been weak for decades and the economy has been sustained by the tourism and meetings sectors – it is number four in the world for conventions, according to the International Congress and Convention Association – technology is rapidly catching up as one of the top-performing industries.

“We didn’t see its strength at first,” Kieker says. “In fact, we learnt it from Silicon Valley. They told us: ‘Right now, it’s in Silicon Valley and Berlin that you see IT start-ups on a huge scale.’” Kieker calls it the city’s “second wave” of creativity – a follow-up to the mash-up of artists and cultures that turned nineties reunified Berlin into a bohemian hub.

When figures released last year showed that 1,860 tech companies launched in 2010 in Berlin, the world finally took note – e136 million in funding poured into 81 start-ups, and Skype co-founder Niklas Zennstrom’s investment fund put e3.1 million into Berlin software start-up 6Wunderkinder.

There are about 50,000 staff working for the city’s 5,700 IT companies, producing an annual turnover of more than e10 billion and accounting for more than 10 per cent of the city’s GDP. In September, ten fledgling companies will receive the three-month-long Startupbootcamp (startupbootcamp.org) treatment, when the “Startup Accelerator” comes to the capital.

Infrastructure is also catching up, with the much-needed new Brandenburg International airport opening in October 2013 (it was originally scheduled to open this month but has been delayed) and the 10,000-person capacity City Cube exhibition centre opening in west Berlin in 2014 to replace the ICC Berlin (icc-berlin.de), which will be renovated.

So what is it about the city that has attracted this 50,000-strong force of pioneers? “Berlin has a counterculture image and attitude that sits well with entrepreneurship,” says Eric Wahlforss, chief technology officer and co-founder of Sound Cloud, an audio-sharing platform and one of the city’s success stories, with an online community of 10 million. “It’s an atmosphere of recognising how things are done, then looking to do them in a different way, which is the same mantra needed to launch a start-up.

“More than that, there’s a certain infectious atmosphere here of collaboration and innovation – in arts, design, fashion and so many other fields including tech – that spurs us on.”

For Johannes Reck, co-founder of online tour booking engine Get Your Guide, which saw its sales increase by 600 per cent within a year of moving here, the city’s international flavour sealed the deal. “We need so many different languages, and Berlin is one of the few cities in Europe where it’s possible to hire skilled people with [a particular] language the next day.”

Despite this, delays in attaining visas were cited by every start-up I spoke to. “German bureaucracy is definitely cumbersome,” Reck says. Janka Schmeisser, marketing and publishing manager at tech recruitment consultancy I-potentials, says it is a growing concern: “We have a lot of candidates from India, but it’s much easier for them to go to the US so we lose them.” Still, living costs are low, and Germany plans to lower the legal wage threshold for high-skilled immigrant workers from e66,000 to e34,200 in sectors with high vacancies, which should help.

Look around and you’ll see the city’s creative streak reflected in its architecture. At the Neues Museum, in the fashionable Mitte district east of the centre, Nefertiti’s bust sits proudly inside David Chipperfield’s beautiful 2003 renovation of the 19th-century building. Not far from here, across the Spree, the Baroque Royal Palace is due to be resurrected in 2014 in a controversial e552 million state-funded project.

Over at Brandenburg Gate, inside nearby DZ Bank, Frank Gehry’s undulating design makes for a spectacular meetings venue (visit axica.de), while north to the Reichstag, visitors can stand in Norman Foster’s glass dome and inspect democracy in action below in the Bundestag. The imposing pre-reunification steel and glass edifice of the Neue Nationalgalerie, near the Tiergarten, houses striking Cubist, Expressionist, Bauhaus and Surrealist works.

“Berlin doesn’t look like old, communist, kaput East Berlin anymore,” says Alexander Kolpin, co-founder of Berlin Partner, a public-private partnership which works to attract new business. “But it’s still cheap compared with Munich or London. You can still try to live your dreams, found a start-up and live with little money.”

Watch a short history of Sound Cloud at storywheel.cc, and you will see the romantic beginnings of Berlin’s start-ups as those who flock to the city imagine it. “This is our first office,” one says, as the first frame pops up. “Actually, the second, the first was a café,” they chuckle. Cue slides of web developers working on tables knocked together by the founders, or curled up on a beanbag, sleeping at the office.

Work hubs, such as Sankt Oberholz (sanktoberholz.de) in the north and Betahaus (betahaus.de) in Moritzplatz in the south, are popular for networking. Young companies and freelancers rent workspace or chill out in the lounges or eateries – Betahaus calls itself a “Vienna-style coffee house, a library or university campus”.

Those new to the city can log on to Venture Village (venturevillage.eu) for news and jobs, or head to Web Week (berlinwebweek.de), a series of conferences and events that take place every May. Venture capitalists and aspirational developers come here to meet and form new businesses over coffee – some 6,000 participants were expected this year.

This may all sound rather laid-back, but the city is changing, and gentrification abounds. Kolpin tells of Club Commission, a group of entrepreneurs that have joined forces to protect its club culture from property developers. “There has to be a compromise to keep Berlin alive, as an active, 24/7 city,” he says.

Reck calls it a “classic maturation process”, and only worries that the city needs to do more to protect its creative edge. Visit Berlin’s Kieker sees the positive – vast quantities of destitute land are being bought up by hotels. “Berlin is the last developing city in the old world because it was out of business for 60 years, being bombed to rubble and then divided. Now it’s a great comeback story, so everybody is putting money into it,” he says.

Hotel rates are competitive, and the stock is set to increase. South of the River Spree, the 232-room Waldorf Astoria Berlin will open in September, while a 256-room Crowne Plaza opens this month. The Alexander Parkside complex will open this summer, housing a 153-room Hotel Indigo and a 240-room Holiday Inn.

The new Brandenburg airport’s opening may have been delayed but it still signals the end of an era that saw a divided city split between three airports. It should also be a pleasant place to pass through – the Bauhaus-inspired exterior hides soaring ceilings of steel and glass and a compact, easily navigable layout.

The airport will be the new home of Oneworld carrier Air Berlin, and the Lufthansa Group is dedicating 35 aircraft to it. Its 27 million passenger capacity could, eventually, increase to 45 million. Meanwhile, over at the soon-to-be-defunct Tegel airport, a 230-hectare research hub for renewable energy, biotechnology and “city solutions” such as water management will open.

“It was the last missing piece for the rebuilding of Berlin,” Kieker says. “When the wall came down, everybody here thought ‘Okay, that’s it – Berlin is back.’ But nothing happened. Berlin was a seriously wounded city, and it took another ten to 15 years to rebuild and recover. Now we are seeing the results.”

Standing in the brisk breeze outside the new airport, my guide tells me: “There is more steel in the roof than in the Eiffel Tower.” It is a fitting gateway, then, for a city that has set its ambitions high and, from its citizens’ determination to innovate, it looks like Berlin might surpass even its own expectations.