London vs. Berlin: Which capital leads the way as Europe's top startup hub?
or some, Berlin has already surpassed London and established itself as Europe’s new startup hub. With Brexit on the horizon, will the German capital’s already thriving startup scene become even stronger? Here’s how the two metropolises compare when it comes to founding a company.
It’s no secret that London has led the way in Europe for years in terms of innovation. Boasting startup giants such as Deliveroo, Transferwise and Shazam, the city continues to attract new businesses and investors. It’s also home to one of the world’s leading financial sectors.
But Britain’s departure from the EU is looming, and Berlin is no small fish anymore. What with heavyweights like Soundcloud, Zalando and Delivery Hero already under its belt, the German capital is looking to conquer Europe with a buzzing startup community full of young, hungry techies and relatively affordable housing.
But can it compare to London’s solid structure for opening a business? And what about the sheer diversity of available work the British capital has long been known to offer? We take a look at what makes both of these startup hubs great - and let you decide.
Berlin’s share of startup jobs has risen by 56 percent since the EU referendum, according to a study by job search engine Adzuna which was published in July. Not only has the proportion of vacancies in Berlin startups skyrocketed in the past two years, the study also found that the city’s startup industry has a larger share of its labour market than is the case with London.
Some 1.5 million Londoners are employed by startups, a city that’s home to nearly nine million people. And of the nearly four million residents living in Berlin, just over 100,000 of them work at startups, Florian Nöll, founder and chairman of the German Startups Association told German broadcaster Deutschlandfunk in April.
But London’s ease of setting up a business and low administrative barriers is an area which it often receives praise. According to online graphic design marketplace 99designs, a company on average takes less than five days to set up and register online at a price tag of merely €18.
London is and always has been where the world comes to do business.
Provided your German language skills are tip top, the same process should take you a similar amount of time in Berlin. While this doesn’t seem too bad, the cost of creating a company in the German capital comes in at a whopping €650.
London’s got more access to early-stage venture capital than any other city after San Francisco, New York and Boston, partner at UK-based VC firm LocalGlobe Saul Klein told Startup Guide. “It’s also got a huge talent pool of people that work in digital and tech,” he says.
Notably though, the Financial Times reported that German startups saw record investment last year with an increase of 88 percent to €4.3 billion, driven by a few relatively mature businesses which were listed on the stock market.
And according to the Senate of Berlin, one-fifth of the city’s startups have relocated from other areas, a figure it claims is the highest percentage worldwide.
When it comes to the total funding provided to startups, Teleport, a website that supports knowledge workers in finding the best places to work and live recently compared the two cities. London gets almost €5 billion annually, whereas Berlin last year was recorded as receiving just over €1 billion. The UK capital also has more unicorns than any other European city, which helps provide visible role models and experienced mentors.
It’s safe to say that Berlin is on par with London when it comes to hiring people from a variety of backgrounds. In both cities, about half of all workers are from abroad.
In the German capital, over 18 percent of the population are foreign-born, representing approximately 190 countries. Meanwhile over 300 languages are spoken in London, with over a third of residents being born overseas.
Also something to make note of is the gender ratio of startup founders. Over 16 percent of Berlin’s founders are women. And based on data collected from the 2017 Women Entrepreneur Cities Index by Dell Technologies, London is the third best city in the world for supporting high-potential female founders.
German startups saw record investment last year with an increase of 88 percent to €4.3 billion.
Meanwhile startup customers are a bit more international in London, with over 50 percent of customers coming from outside the UK - ahead of Berlin whose foreign customers comprise of 47 percent.
Berlin looks to be constantly evolving with its diverse array of residents. Startup gatherings were quite often held in German prior to 2012-2013, Sascha Konietzke, Cofounder and CEO of Berlin-based software company Contentful told Startup Guide. Then, with many people coming to Berlin from all over the world, almost instantly, user groups and presentations were being held in English “which helped immensely in terms of including foreign people in the ecosystem and increasing knowledge sharing,” Konietzke added.
Berlin’s open-mindedness when it comes to startups is its unique selling point, according to the city’s Senator for Economics, Ramona Pop. In the Startup Guide Berlin Vol. 4 book, which was published in July, she said that Berlin ranks among the top ten startup ecosystems across the globe.
But the mayor of London, Sadiq Khan, begs to differ. In the Startup Guide London book, he said the city “is and always has been where the world comes to do business.”
Living and working
From their equally open attitudes toward their loud and proud LGBT communities (Pride Parade is a force to be reckoned with in either city) to their tourist attractions rich in history that old Europe often lends itself to, similarities between London and Berlin can easily be drawn.
How they differ though is more interesting, as well as possibly somewhat telling as to whether your budding business is particularly suited to one or the other.
One of the most glaring ways in which Berlin stands in stark contrast to London is that in the latter, cost of living in terms of both housing and office rental costs is extremely high. Cost of talent in London is also higher than elsewhere.
Berlin, on the other hand, has long had a reputation of being poor, but sexy and less fast-paced than London. Various reports have suggested that the whole of Germany would be richer without Berlin. In spite of rising rental costs in recent years, living in Berlin is still comparatively cheaper than in London. Cost of living index Expatistan compares the rent for an 85 square-metre furnished flat in an expensive area, and reckons one would expect to pay €2,685 a month in London, as opposed to €1,314 in Berlin.
As you’ve probably heard, Berlin has a lot to offer the edgier audience. The city boasts a vast selection of cheap bars, restaurants and clubs that take up whole spaces in the central parts of the city – some of them open far later than those of its competitor. You can even go to the annual 48 hour summer art festival, 48 Stunden Neukölln, where artists keep their studios open all night showing their work - a reflection of the largely creative community living in Berlin.
At this point you’re probably itching to know how much the dwellers in these respective cities actually earn. According to Payscale.com, the average annual salary in Berlin is just under €45,000 and €51,000 for software engineers. In London, the average annual salary is €39,000, although for software engineers this is €49,000.
When it all comes down to it, from the ease of launching a company to how much financial backing the respective cities get, both cities offer arguably everything a startup could ask for.
That being said though, what with a long list of things Berlin has going for itself, such as its comparatively low cost of living and amount of vacancies in the startup industry, the scale seems to be tipping in the German capital's favour - for the time being, at least.
Main photo: Unplash/Robin Spielmann