Berlin is not just a vibrant hub for artists, musicians and other creatives, it has also become a popular choice of location for startups, particularly in the digital and web sector. The reasons for this appear to be obvious: the rents are cheap, cultural life is attractive and with a well-established startup community, workforce and networks are a plenty on “Silicon Allee”. Many entrepreneurs from CEE are following the hype and start their businesses in the German capital. We wanted to know more about their motivations and experience and talked to the Polish founder of Creative Construction and the Austrian co-founders of Weavly and Archify, who have all based their startups in Berlin.
Creative Construction co-founder Agnieszka Walorska. Photo: creativeconstruction.de“I never foresaw starting a business in Berlin,” explains Agnieszka Walorska, an entrepreneur from Poland who founded Creative Construction, a digital consultancy and development agency. After her studies had brought her to Berlin, Walorska decided to stay and worked in a number of startups in the capital. She was among the first ten employees at StudiVZ, the “German Facebook,” which sold for more than 100 million dollars in 2007. Walorska had brought the service to the Polish market.
After seeing a need in the market, Walorska decided to start Creative Construction with her partner. “I have gained most of my internet and web experience by working hands-on in different startups. Whilst I never really thought about starting a digital agency for myself, being in Berlin and working for startups gave me the opportunity to see the need for a consultancy service, which then led to web and app development as well.”
It hasn’t been easy, however. “German investors don’t really seem to be interested in unproven ideas, and are more likely to invest in a startup idea that has been tested and proven in the American market,” says Walorska. Finding competent employees is another obstacle despite the abundance of young, creative minds in Berlin. “I interview people almost every week to try to find good candidates for positions in the company. We interview people for project management positions as well as development and design positions, but it is really hard to find people who are motivated to work hard and move forward.”
Some of the people, who are attracted to Berlin because of its nightlife and cultural offers appear to lack the same enthusiasm and dedication to their employment. The absence of industrial, trade and financial businesses in Berlin mean that whilst the creative bubble grows bigger, the discipline required to sustain a real working business is missing. Yet, Walorska is happy with her international team.
Weavly: Vienna is nice, but…
Weavly co-founder Oliver Lukesch. Photo: privateFor a long time London was the heart of European web development. Now, investors from London are supporting entrepreneurs in Berlin because they can invest in a project that is able to run for twice as long for the same amount of money as in the British capital. Besides, Berlin offers good infrastructure for startups through its numerous shared working spaces, where young entrepreneurs can meet like-minded people and share ideas.
Oliver Lukesch, founder of Weavly, a service that allows users to create mashups of video and sound (see our previous feature), shares this experience. Weavly originated in Vienna but now has its main office in Berlin. “We’re currently a team of six people, four from Austria, one from Greece and one from Romania. We only use English for our internal communication and having a network that spans around Europe sitting at the desks beside you rocks”.
An important reason for Weavly to choose Berlin was the access to networks. “Vienna has a nice tech and startup community, but Berlin beats it several times in terms of magnitude and activity. There is something interesting taking place almost every day… Apart from this, Weavly makes heavy use of the SoundCloud and Loopcam API, so being able to meet with the guys directly is a major advantage”. But Lukesch agrees with Walorska’s opinion regarding investors. “It’s not Silicon Valley. Getting a company funded whose streams of revenue are not as clearly defined as in a B2B startup is quite a challenge, even in creative Berlin…”
Archify: finding the best talent
Archify co-founder Gerald Bäck. Photo: archify.comWhile some founders are struggling with finding truly competent staff for their startups in Berlin, the Archify team have relocated to Berlin from Vienna for exactly that reason. Gerald Bäck, co-founder of the startup that offers a browser tool, which captures and organises social stream and browser activity, explains their reasons for moving to Berlin: “The main factor was finding talent. It is difficult in Austria to convince local developers, designers or marketers to join your startup, but talent from all over Europe and even the States are willing to live in Berlin”. The ability to network in Berlin is another plus for Bäck. “Besides hiring talent, it is all about the hype. Berlin is a vibrating city, you can go to many events and meet interesting people everyday.”
With the advantages seemingly outnumbering the downsides, CEE capitals like Vienna, Warsaw, Prague and Budapest, will have to continue to work hard to limit the brain drain of entrepreneurial talent to the German capital. Already, initiatives like STARTeurope/Pioneers as well as local governments are trying to foster a stronger startup community in CEE.
What do you think the local communities and governments in CEE should do to keep startups from moving away?