For a long time the US has been regarded as the established optimum location for founding a business. The fertile market of the New World has attracted the young, smart and ambitious to its shores in the hope that they can kick-start their business with the promise that anyone can make it in America.
Flashy, techy success stories such as Facebook and Twitter gave a boost to the idea of the ‘American Dream’, while cities in Europe, Asia and Australasia looked on and asked why it was that they boasted no Mark Zuckerberg.
Traditionally, if there was to be a Silicon Valley outside the States it was thought to be found in London. The English language, international status and high density of top universities in the British capital compared to other European capitals saw London’s startup scene burgeon faster than other big cities on the continent. Since the economic crash of 2008 the UK Government has been understandably keen to encourage and foster this scene, introducing startup loans and the Growth Accelerator Programme, and printing posters proclaiming the city to be the easiest place to start a business in Europe.
What the UK Government can’t control is the high living costs of living in London. This is undoubtedly the biggest impediment stalling bright but poor entrepreneurs setting up camp there. In addition to this, though the EU open borders policy sees the free flow of citizens from the other 27 countries in the Union, the UK visa system is notoriously trickier to navigate for non-EU citizens in comparison to those of other member countries.
Berlin: Poor and Sexy
This has led to many now harking Berlin as the top tech start up scene in Europe. Not only is Berlin less expensive than London, but it is also one of the cheapest cities to live in in the whole of Germany, attracting the young and smart away from the media buzz of slick Hamburg, or Frankfurt, the heart of Germanic finance.
Though many comment upon the apparent void of ambition evident in Berlin – the city can sometimes appear to be populated solely with hipsters drinking green tea and smoking pot on the banks of the canal – in old warehouses and ex-Stasi buildings you are as likely to come across a burgeoning startup as you come across an electro club.
Factory is one such venue capitalizing on the blooming startup scene, titling itself a ‘campus for founders and innovators’ (notice the Silicon Valley-esque vocabulary) inviting startups to work together in creating ‘something special’ as a ‘curated community.’ Indeed, the liberal nature and artistic diversity of Berlin is as much a pull away from London as the cheap rent.
One of Factory’s tenants is Sound Cloud, the music sharing site created in Sweden which raised $60 million in its latest funding round and now sees 12 hours of music uploaded on to its platform every minute. Speaking to ABC News co-founder Alexander Ljung said that he chose Berlin above London because, ‘it really felt like this place was an intersection of art and technology and everybody was doing things their own way.’
Berlin is also home to the highest valued startup up in Europe ranked by The Wall Street Journal and Dow Jones VentureSource. Zalando began as an online site for shoes before later branching out to clothing and lifestyle products in general. Now operational throughout Europe, Zalando reportedly saw a turnover for Q1 2014 of over 501 million euros.
SoundCloud and Zalando may well be the biggest beasts in the Berlin start-up scene but they are by no means the only ones on the rise. Furthermore, as the city’s reputation as a startup hub grows, it will attract more ambitious entrepreneurs keen to feed off the energy radiating there.
Indeed, while London’s tech scene languishes behind, San Francisco should look over its shoulder at the quickening rise of Silicon Allee.