In Berlin, a tech startup scene booms

BERLIN -- Innovators and investors alike are descending upon the German capital's thriving tech startup community. Are Berlin's copycat days finally over?
Written by Shannon Smith, Correspondent (Berlin)

BERLIN -- If you enter St. Oberholz cafe in Berlin's central Mitte district, you'll be met by an imposing, two-floor Russian-style interior, a throw-back to the German capital's divided past. Next you may notice the inordinate number of glowing laptops atop coffee tables, dispersed evenly among retro-upholstered armchairs and stools.

Upstairs the air is alive. Some of the chatting patrons are students, but soon it becomes clear that many of these folks mean business: "I'm going to push it as far as I can," someone says in accented English. "The only way to make a dent is to take risks and innovate." A long-time credo in Silicon Valley, the attitude is a relatively fresh one here - and speaks volumes about Berlin's maturing entrepreneurial scene.

The scales have already tipped, some say: Berlin is Europe's new tech startup hub. With officials claiming anywhere from 60 to 100 startups currently in the city, it may have surpassed London for the title. Meanwhile the total capital volume invested in the city's high-tech businesses spiked in 2011, according to Germany's Spiegel Online International.

Berlin's low cost of living and geographical proximity to talent hotbeds in eastern Europe have been widely identified as catalysts for the German capital's innovative success stories, including SoundCloud and 6 Wunderkinder. That's not to mention Berlin's strong tradition of subculture (think San Francisco in the 60s/70s) - which tends to breed and attract outliers.

Criticism has been levied in the past against the city's previous startup successes, most notably the highly-lucrative business models from the US duplicated by the Samwer brothers for the European market. But observers say creative leadership is now on the rise, with impassioned "anti-copycat manifestos" helping to guide the way.

James Qureitem of startup Chrome Gekko and software engineer Richard Mazorodze could be found at St. Oberholz meeting to develop a new game. They converse, passing an iPhone back and forth, testing and tweaking the day away.

"We don't really follow a rule book on how to design a game," Qureitem said. "We basically just bounce ideas off one another until we have something we like."

Both said they came to Berlin two years ago to escape the daily grind and corporate mentality of the UK.

"London will never be a good place for startups," Mazorodze said. "You can't even be a freelancer there, it's crazy. I know people who need thousands coming in a month just to stay afloat."

Qureitem described how Chrome Gekko was approached last year by investment company Accel - who lists Facebook's Mark Zuckerberg and Etsy's Robert Kalin among its entrepreneurs - but turned down the offer.

"If something bites, then maybe we'll consider it," Qureitem said. "But then it will be something we've achieved and not someone external coming in and influencing us."

Observers of the scene say a sense of creative pride is growing in Berlin, with an investor-innovator power shift well underway.

"A lot of money in Berlin has been generated by investors capitalizing on business models that have already been successful elsewhere," founder and TechBerlin blogger Nikolas Woischnik said. "But there's much more innovation now with creative guys coming up with their own products, often with technical founders or a technical co-founder."

Among those innovators is Christian Reber, a self-proclaimed serial entrepreneur, who has been programming since the age of twelve. He launched his company 6 Wunderkinder in Berlin last year following the sale of his previous startup to a German investor.

"When we were ready, it literally took us about three days, to get two business angels invest their private money in our idea," Reber said. "I simply dropped the line 'Who wants to invest in the next-gen business tool?' on Xing and half an hour later, I received the best phone call of my life."

6 Wunderkinder's hit product Wunderlist crossed the million-user threshold in August, while Reber's company recently garnered several million euros in funding from Skype's Swedish founder, Niklas Zennström.

"A new generation of German companies are gaining recognition for their creativity, smart design, and elegant simplicity today," Reber said. "[Berlin] means everything to me and I'll do everything in my power to attract more entrepreneurs here."

Woischnik says he is most excited about the development of an interactive technology community:

"People really help each other out by sharing so much information and knowledge. They share processes and how they work, their favorite project management software, seminars on metrics and tips on pitching to investors. It's really great - and so not german by nature. Startups are here are pretty open source themselves."

Back at St. Oberholz, Qureitem and Mazorodze just seem content with their freedom.

"This is a good life," Qureitem said. "We're doing what we want, and this is how it should be. You shouldn't be confined to doing stuff that other people tell you to do all the time. This is addictive, and I will fight to keep making a living by doing this."

Related: A nice roundup of new startups from Spiegel Online International.

Photo: Oh-Berlin.com/Flickr

This post was originally published on Smartplanet.com

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