London is commonly considered Europe’s top spot for digital start-up companies. A large talent pool, vast cultural diversity and passionate government and City support create a dynamic environment, allowing England’s capital to thrive in the tech business. In recent years, however, another city has started to inch forward in the race to Europe’s tech capital: Berlin.
A recently published report by Compass found that Berlin has the fastest growing start-up ecosystem in the world, with new businesses founded every 20 minutes in the city.
Patrick Llewellyn, CEO of 99designs, an online graphic design marketplace, says, “The start-up scene here is vibrant and there’s a lot of talent coming from all over the world looking for exciting opportunities. We have had a presence in Europe for four years, and our European team in Berlin has been growing so fast that we have had to move to bigger offices three times – the multicultural personality of Berlin has allowed us to handle the whole European market from just one city,” according to Forbes.
The case for Berlin
London still remains ahead based on financial statistics—about 275,000 start-ups have attracted €2.89 billion of venture capital investments, bring the total London eco-system to €48.3 billion. Berlin, on the other hand has about 171,000 start-ups, attracted €1.1 billion in investments and has an ecosystem value of €30.2 billion.
London’s supportive tax and regulatory system play a big par tin this. While it takes an average of five days and €22 to create and register a company in London, rules in Berlin require seven days and €700 in registration costs. Not to mention Germany’s corporation tax is 33%, while the UK’s is 25%.
So how can Berlin compete?
The biggest advantage that Berlin has is the work/life balance, according to Forbes. A relatively lower cost of living in Berlin—57% lower than London attracts talented, young people. Rents in London are 70% higher—average rent for a one-bedroom apartment in London’s city center is about €2,314, while Berlin’s is a mere €665. Furthermore, monthly transport costs are on average €180 in London, while about €79 in Berlin.
A few facts about Berlin’s start-up environment
Those looking to establish or work in a start-up in Berlin may be interested in some of the main conclusions from a report published just last month on German start-up company Jobspotting.com
-Berlin’s start-up workforce is incredibly diverse—49% of start-up employees are not German citizens
-Interns make less than the German minimum wage—boo!
-Berlin start-ups have an extreme gender pay gap—the median salary for full-time males is €3,333 and females €2,500, a difference of nearly 25%! (double boo!)
-Software developers and managers earn highest salaries, while sales and marketing jobs pay the least—the median starting salary with no experience is €2,900 for software developers and €2,500 for managers.
-University dropouts earn more than graduates—however, they comprise just 6% of survey respondents.
-Those who work in a Berlin start-up are happier than those who don’t—despite tending to feel underpaid.
-Work experience has a strong positive influence on salaries—it would found to be one of the strongest drivers, while working hard was the most important determinant.