5 ms·
This doesn't really get to the big issue. Which is that Berlin being a startup hub is all marketing in the first place, it's probably not very popular to say bu
by Kequc 10y ago
This doesn't really get to the big issue. Which is that Berlin being a startup hub is all marketing in the first place, it's probably not very popular to say but somebody has to say it.
Berlin has no money, investors don't come here. More than a couple of investors I jumped through hoops for eventually I made it all the way to the top decision maker who was forced to reveal "oh we don't have any money but in exchange for some equity we can hook you up with business connections." No small amount of equity. Double digits every time. And the same is true if you find an incubator willing to take you, expect very little money, a short tenure, and a double digit equity stake. This all is in line with the level of talent which exists here. If you take a look at the Berlin job market it's all about legacy systems, some PHP, maybe Java if you're lucky.
There's no help available from the government. In fact if you own a startup your taxes skyrocket. Your health insurance doubles. If you're trying to sort out a visa at the same time as all that, good luck! The government will subsidise a loan for you, but it has to be a personal loan. Which means banks are willing to give out risky loans. It's the same thing that happened in the housing crash. Which is why it needs to be a personal loan, your company failing means nothing you have to pay it back.
Letters arrive in your mailbox claiming you owe them money, which apparently isn't illegal. All scams. People you meet at networking events promise to hook you up with business connections for equity or money.
This is a market that sells shovels.
You want to buy a shovel and start digging there's a hundred people around selling them. But you better hope that shovel doesn't require Wifi because bars and cafes are held responsible for torrent traffic, which means none of them offer it. Therefore rent a co-working space [shovel] or an office [shovel].
- ohthehugemanate 10y agoI wonder if it would be different if Germany didn't have such a hostile environment for startups? Behind closed doors, people say "on the one hand, this is the hardest place in the developed world to start a business. On the other hand, if you manage to get something running in Germany, it will run everywhere."
- tibbetts 10y ago"If you can make it in New York you can make it anywhere" sounds good as a song lyric but it isn't really true for NYC and probably isn't true for Berlin. When you have a hostile environment usually you are selecting for something weird (ability to navigate beaurocracy, early monetization) rather than some ideal attribute that is beneficial everywhere.
- matt4077 10y agoI have no idea why people say that... I've started two companies and been involved in a few more and the only time I felt the government was holding me back was the first time I hired someone. That's... quite a lot of forms and strange institutions I had never heard of before. But that's a process and when you've done it once it's just copy&paste for every n+1. Or you get an accountant to do it for you, which is apparently 50Euros/employee/year for all the paperwork. Other than that it takes about half a day to register a business. Despite what people say, you'll always get by without /any/ paperwork if you don't have employees or revenue. If there's anything missing in Berlin I'd say it's a really good university. Today's Silicon Valley survives on its symbiosis with Stanford. Before that, XeroX and a few other labs were probably nurturing, plus the hippie spirit of the 60ies that encouraged people to hang out and "do cool stuff". Berlin does't have that industrial base because it was isolated for 40 years, causing large companies (i. e. Siemens) to leave. It's creating a good community but it's missing the exceptional people that can catalyze real innovation.
- nordify 10y agoWhy always the focus on free Wifi? Germany, like most of Europe, has good 3G/4G coverage. Rates are reasonable, so you can provide your own connectivity. Far more cheaper than renting a space just to get free Wifi. That doesn't mean that the German laws about liability for offering connectivity don't suck.
- glasz 10y ago3g/4g rates are a joke. i call robbery. ever been outside germany?
- jakobegger 10y agoCellular rates in Germany are pretty high. On a recent trip I was shocked to find out that prepaid mobile data is roughly 10x - 20x more expensive than in neighbouring countries.
- pferdone 10y agoI pay 15€/month for 4GB LTE with unlimited SMS and minutes and it's prepaid. I know it's not the best in Europe but it has gotten better.
- greggarious 10y agoUnlimited 4G?
- pferdone 10y agoNo 4GB monthly data cap. winsim.de
- xiaoma 10y agoIn Taiwan, it's ~22€/month for prepaid phone service plus unlimited 3G. And by unlimited, I mean I used over 100gb for that price this March.
- the_mitsuhiko 10y ago
- rtpg 10y agoIs there ever a reason to give equity for free? If the person thinks they have valuable business connections, then they should be willing to invest to then reap the rewards of the connection.
- je42 10y agoIn my experience the value of "business relationships" is not positive but actually negative. A business relationship cannot be easily transferred to another entity. The word relationship is the key here. Any relationship requires work from both parties. So, I would be very careful to give away equity for this 'promise'...
- ThePhysicist 10y agoMy two cents: * Health insurance: When you're employed, your employer pays roughly half of your insurance premium. As a freelancer, you have to pay 100 % yourself. Currently, the minimum rate for a freelancer is about 350 € / month, which is still very reasonable in my opinion. Also, as a freelancer you can deduce a portion of this from your taxes. * Venture capital: From my experience this is mostly true, as there are many people that try to appear as if they have very good connections and money, but in the end they offer pre-seed level investments for double-digit equity. A few of the international VCs have offices in Berlin now though, so my advice would be to stay away from the impostors and go to firms that have actual credibility and a history of funding successful startups. * Public funding: There are some programs to help people start companies that can provide you with up to 100 T€ in capital (most notably EXIST), and there are various federal programs that provide money as well (e.g. the IBB). * Visa: In my experience, Berlin has a very liberal visa policy for foreigners, so it's not very difficult to get a freelancer / business founder visa for three years without many strings attached (I have several friends that got one immediately when going to the Ausländerbehörde). So, compared to e.g. the US the process is still infinitely easier I'd say and the cost is near zero (60 € in fees I think). * Loans to companies: As everywhere in the world, banks won't give you a credit without securing it appropriately. In Germany you can start a Limited (UG) with a risk capital as low as 1 €, so of course your bank will ask for additional security as otherwise you could just use the money and let the company go bankrupt afterwards. I'd be surprised if US banks were any different in this respect. * Letters arriving in your mailbox: This is a scam that relies on your company being publicly listed in the company register (Handelsregister). Currently the register court already warns you about this when you register a new company. There is a legal effort to stop these people as well, but it's difficult since most of them just use an officially looking letterhead with an eagle on it, which is not per se illegal though it is misleading of course. Again, some common sense will help to not fall for this. * Meeting investors at meetups / events: Forget about those, as they attract many impostors and people that will just waste your time. Probably not much different in SF or elsewhere. Knowing the right people will help here, but this of course takes time. * Success: I agree that it's very hard to succeed with a startup in Germany, and there are very few big success stories in the startup scene here so far. * Job market: Mostly true, although there are more and more well-paying jobs available as more established startups and companies come to Berlin. Six-digit salaries for good senior developers are not unheard of, though most people probably make much less. That said, the income distribution in Germany is not as steep as e.g. in the US, and the war for talent isn't as fierce, which means that salaries are lower as well.
- bigben1 10y agoIndeed, tons of job postings with php, java, Typo(cms). I am often wondering what is it that i am missing here. And one generally gets very much the feeling that true innovation and creativity is not really apreciated in here. Goes pretty well together with the unfriendly business environment, where it was not possible to start a company with limited liability with less than 25 000€ In start capital until 8 years ago. So much hype in this "Berlin startup city" thing.
- frequent 10y agoI can't speak for running a startup in Berlin but I bootstrapped a small startup in Bavaria a few years ago and while I agree it's not easy I don't think government support is as nonexistent as you claim. After all, you are talking taxpayers money (and you're not TBTF), so fruits are hanging high. Still, try: 1) Founder's Grant Coming from regular employment back then made you eligible to apply for an "Existenzgründerzuschuss" [1] (sorry, all links in German) with the Agentur für Arbeit [2]. It will pay you the equivalent of unemployment payments (~ 50% of your last brut salary) [2] +300€ for social security for six months. Tax free this is. I got this with my company founded & business plan. 2) Maintain Unemployment Insurance You can continue to pay into unemployment insurance at the minimum rate (~30€/month) which maintains your payment tenure and status in case your startup doesn't work out. 3) Regional Govt Startup Support Networks I was living in the north of Bavaria back then, where the "Netzwerk Nordbayern/BayStartup" [4] provided business plan competitions & coaching, workshops on all kind of topics, networking, investor pitches and liasoning, mentoring, plus an open ear. All free of charge. I was a mentor myself for some time and I only have praise for the effort they make to get startups on track. 4) Govt Financing The KFW [5] provides a few financing programs for founders as part of the (yes) Marshall Plan's European Recovery Programm (ERP). Those are actual credit lines, burn at your own risk... plus you can only apply to those programs through a bank. It's been a while since I looked into the details - on a quick glance [6]: program 067: - up to 100k€ - from 2% p.a., no own capital required - KFW covers 80% in case of loss, you're liable for 20% to your bank program 058: - up to 500k€ - from 0.4% p.a., 10%+ own capital required - KFW covers 100% in case of loss - "Eigenkapital-Charakter" ~ counts like own capital ~ bolsters credit rating I didn't succeed in applying for those though. Had a bank, they charged me plenty to offer a different package with higher interest and more "exposure" to be guaranteed through yet another bank [6] who eventually declined my application. Another story... 5) Tax "Breaks" Germany is no low tax country for sure, but you can improvise. Like with a classic GmbH (limited liablity company, bold 25k€ required) you can appoint yourself as CEO without salary, forward your own credit lines (the are all private as you say), pay yourself interest only and no salary. This should put you in the minimum bracket for health insurance, too. Anyway, my point is there is help available from the government. And on a side note: those letters you are referring to everybody gets with every entry into the public company registry [8] - startup or not. Note the scammer warning they even had to put on their landing page. [1] https://www.arbeitsagentur.de/web/wcm/idc/groups/public/documents/webdatei/mdaw/mdqx/~edisp/l6019022dstbai378431.pdf https://www.arbeitsagentur.de/web/wcm/idc/groups/public/docu... [2] https://www.arbeitsagentur.de/web/content/DE/BuergerinnenUndBuerger/ArbeitundBeruf/Existenzgruendung/Index.htm https://www.arbeitsagentur.de/web/content/DE/BuergerinnenUnd... [3] https://de.wikipedia.org/wiki/Arbeitslosengeld_(Deutschland)#H.C3.B6he_des_Arbeitslosengeldes https://de.wikipedia.org/wiki/Arbeitslosengeld_(Deutschland)... [4] http://www.baystartup.de/ http://www.baystartup.de/ [5] https://www.kfw.de/inlandsfoerderung/Privatpersonen/Gr%C3%BCnden-Erweitern/ https://www.kfw.de/inlandsfoerderung/Privatpersonen/Gr%C3%BC... [6] https://www.kfw.de/inlandsfoerderung/Privatpersonen/Existenzgr%C3%BCndung/F%C3%B6rderprodukte/F%C3%B6rderprodukte-(S3).html https://www.kfw.de/inlandsfoerderung/Privatpersonen/Existenz... [7] http://www.bb-bayern.de/ http://www.bb-bayern.de/ [8] https://www.handelsregister.de/rp_web/welcome.do https://www.handelsregister.de/rp_web/welcome.do
- whazor 10y agoIn Germany it takes a long time to win trust, from both customers and investors point of view. Because there is a more long term orientation compared to USA. Also, Germany has a lower indulgence which tends to make them more cynic. However, Berlin is a great place for remote work. Rents are relatively low and the city has a great vibe.
- bogomipz 10y agoI am curious about your comments: "Berlin has no money, investors don't come here." Many articles have been circulating since this summer about how how Berlin startups have taken in 2.4 million Euros in VC money. Source: http://www.bloomberg.com/news/articles/2016-07-28/berlin-s-startup-hub-wants-to-prove-it-s-more-than-just-a-scene http://www.bloomberg.com/news/articles/2016-07-28/berlin-s-s... So there's money somewhere no?
- Kequc 10y agoIt might be. For comparison SV startups get to play with ~$7 billion quarterly, but even if Berlin startups are getting 2.4 billion in a year (other sources say 113 million), companies like Uber and Soundcloud are still considered startups and are roundly advertised as promises of success in Berlin. I feel like some of the money is there. Probably a lot of the money goes into startups which provide services to other startups, as they are the most successful. I haven't seen this money. N26 is a very very promising startup and I believe they recently got a load of money. My primary issue is that people are being lied to about Berlin being a lush place to launch just any startup. Rents are cheap and the vibe is good for artists, but it's expensive to your mental health as a tech entrepreneur. There are one or two large companies which open "startups" of their own and then fund them, based on ideas they've seen in the wild around the city. Their concept is to build something rapidly at low cost and then sell it. This poses an additional challenge to those who want to assemble something that is perhaps a new idea. As capital isn't coming your way without paying customers first, which is a bit of a chicken and egg situation and where these large companies have a strong advantage. The reason I brought up Wifi in cafes isn't because it's a huge issue, but it gives you a sense. It's a symptom of something which is more widespread. Tech is misunderstood more generally and engineers/entrepreneurs aren't really very highly valued, I feel they're being exploited where possible. If you manage to get something off the ground more than likely you have one or two large hooks in you by the time you've gotten there. Unless you show up with a great deal of capital of your own to start, which I believe is what everyone is hoping for.
- FeatureRush 10y agoAbout that job market thing, it is quite close from Berlin to Poznań and Poland in general, there are many shops here that build startups for foreign clients, and many German companies take advantage of that. This is probably where some of that python/ruby/js/whatever jobs went to.
- kakoni 10y agoMakes sense. I was wondering whats driving the hourly/daily rate in Poland (getting quotes for 60-70e per hour) but this explains it.