Over the past few years, Germany has been working to develop an innovation ecosystem in the country. But while the country as a whole might still be evolving, there’s one German city that’s already becoming a real hub for startups: Berlin.
The city’s success has attracted a lot of attention in recent months. Traditional companies and venture capital firms are all taking notice – they want to understand and take advantage of what’s going on in Berlin in terms of disruptive business models and digitization.
So what makes Berlin unique?
When you look at the city, you can tell pretty quickly that it doesn’t have the same number of corporate powerhouses that Frankfurt and Munich have. This makes a big difference. Compared to other cities, Berlin has more space and a lower cost of living. This makes it much easier for young people to move or set up shop here. It’s a good place for entrepreneurs – low rent, low living costs, and a population that has more than its fair share of young people who would rather work for themselves than for traditional companies.
Over time, this has created a great environment for startups. When you look around, you can see some that have done incredibly well. In fact, at least five companies in the city have become unicorns – VC-backed companies worth more than $1 billion. That’s a big number for any one city outside of Silicon Valley. Hellofresh is the most recent of these companies, becoming a unicorn in September 2015. The highly valued company delivers recipes and meal-making kits to customers.
As Berlin’s start up economy has evolved, business incubators and accelerators have cropped up to support new businesses. For example, the city developed a number of Technology Parks to give entrepreneurs access to the infrastructure, coaching, and connections to academic institutions they need to grow. For example, Berliner Innovations focuses on supporting innovative startups in environmental technologies, automation, and medical technologies, while the Spreeknie Technology and Startup Centre provides support to new tech companies. A number of the city’s universities also have business incubators.
Thanks to the city’s commitment to grow the innovation ecosystem in Berlin and the proven success of a number of Berlin based companies, the city has grown into a real hub of e-commerce, ed-tech and fin-tech innovation. Nowadays, many traditional companies are looking to get involved in Berlin’s innovation ecosystem – for example, by investing in or opening digital accelerators here.
There’s a lot to suggest that Berlin’s innovation ecosystem will only continue to grow. When people think of Germany, they often think of flawless engineering and precision. Over time, it will be exciting to see how startups can build upon these German strengths to create entirely new and successful businesses.
Subscribe to KPMG’s Venture Pulse Newsletter
If you would like to receive a newsletter when a new selection of blogs or the latest Venture Pulse report has been released, please reply to:
As the East Regional Head for KPMG in Berlin, Frank plays a very active role in business networks connecting economy, science and politics in Berlin. As Berlin is a hub for Startups and new businesses, Frank is focusing on current business developments with regard to digitalization, Industry 4.0 and building bridges between the old and new economy. Frank specializes in the areas of Risk Management, ICS- and Compliance Services, and has built an excellent international network, that he applies to his current national and international clients, including Deutsche Bahn or Axel Springer in the Eastern Region.