On the continent, Berlin is among the cities best placed to profit from the British vote.
The day following the British referendum to leave the European Union, Berlin Economy Minister Cornelia Yzer’s phone was ringing off the hook. Nearly 100 London-based start-ups were calling to discuss the possibility of moving to the German capital, which has blossomed into one of Europe’s prime start-up hubs. Editor-in-chief of the website Silicon Allee, which covers the Berlin start-up scene, Travis Todd describes the stakes for Berlin.
TECHNOLOGIST What will Berlin gain from Brexit?
TRAVIS TODD Before we can say for sure, we need to see exactly what the UK’s agreement with the European Union will entail. So far, what seems likely is that Berlin will gain some ground as a European start-up hub. The extent to which this will be true remains to be seen.
TECHNOLOGIST Why Berlin?
TRAVIS TODD First of all, Berlin is already the largest start-up hub in Europe, which makes networking, hiring qualified staff and negotiating with authorities easier. Access to capital in Germany’s largest city is also the best in Europe, with €2.15 billion already invested in start-ups in 2015, vs. €1.77 billion in London. What’s more, the cost of living in Berlin is low, especially compared with London. And since Londoners will lose their European passport, start-ups established there will need to work twice as hard to bring their products to European markets. Brexit is the end of the line for London – it marks the beginning of Berlin’s unprecedented lead.
TECHNOLOGIST Berlin is also a great place to live…
TRAVIS TODD The lifestyle alone attracts quite a few tech engineers: the standard of living is top notch. The population is young, international, dynamic and creative. Engineers from Silicon Valley in particular have grown tired of California, where the cost of living is going through the roof. In Berlin, it’s much easier to focus on your product.
TECHNOLOGIST Have you noticed any changes to the German capital so far?
TRAVIS TODD Absolutely. We recently learned that several small companies had decided either to call off moving to London or not to open up shop there. Other large companies such as Transferwise and Revolut have already announced that they’re considering office space in Berlin.
TECHNOLOGIST Can Berlin attract fin-tech start-ups based in London?
TRAVIS TODD The German government has its sights on these companies and has been aggressively pursuing them, but start-ups active in this field are among the companies they’ll have the most difficulty attracting. Not a single large bank is based in Berlin, and a number of other cities with more established financial centres are giving it a run for its money, namely Frankfurt, Paris, Amsterdam and Madrid.
TECHNOLOGIST What could take the wind out of Berlin’s sails?
TRAVIS TODD If too many companies move their operations to the city, the cost of living could shoot up, as in London or Silicon Valley. This could prove dangerous; it’s the government’s job to ensure that this develop- ment continues without a hitch and that the city remains affordable.