A funny thing is happening in Berlin. Its tech scene is gaining international recognition: GigaOm writes it is poised to be Europe’s new tech hub while Reuters, the New York Times, and Fred Wilson have made similar observations. The Startup Genome ranks the city as the world’s 17th best tech ecosystem, beating out Boston, Austin, Mumbai, Sydney, and Melbourne.
Reports estimate Berlin has anywhere from 100 to 1300 startups. One observation I’ve seen repeated is that a big chunk of them are created by newcomers to the city. Further, they are funded by US-based investors like Index Ventures, Union Square Ventures and Ashton Kutcher. One of the largest, ResearchGate, is headquartered in Berlin as well as Cambridge, Mass., with investments from Founders Fund, Benchmark Capital and Accel Partners.
Lastly, as is the case with Soundcloud, the buzzy Amen, and others, their Web products are in English –they see no compelling reason to create separate websites in German. And their employees communicate in English. Wooga, a Berlin-based startup with 190 employees, touts its early policy of communicating in English as one of the keys to diversity among its employees and, in turn, its international success.
That all goes to show that the seemingly unusual qualities of Berlin-based Moped — created by an American, built by a team hailing from Turkey, Spain, Latvia, Great Britain, and Alabama, and funded by US-based VC firms — are actually quite typical of Berlin’s startup scene.
Today the company emerged from private beta with a $1 million seed round from New York investors Betaworks and Lerer Ventures, as well as California-based SV Angel and Berlin-based Earlybird. The deal marks the first Berlin investment for early stage firms Betaworks, Lerer and SV Angel.
Founder Schuyler Deerman said the decision to start his company in Berlin was made, in part, thanks to the lack of competition for outside VC funds. One of the complaints about Berlin’s tech scene is that the local investment activity isn’t as strong as other regions. New accelerators such as HackFwd hope to change that, but in the meantime, US investors are increasingly interested in Berlin. And there are fewer startups competing for their attention there than there are in the Valley.
Deerman actually started out in San Francisco after spending several of his formative years in Berlin. Going to Silicon Valley was an exciting experience, he says, but it was difficult to stand out. “There are 10 times as many people pitching the same VC. Everything is sort of on overload there,” he says. “If you go to San Francisco and start a tech meetup, join the club.” He returned to Berlin, actually did start a tech meetup, established himself in the scene, and began to thrive.
Now, Berlin’s Secretary for Economics, Technology, and Research Nicolas Zimmer uses his app, he says. Like Mayor Bloomberg in New York, Zimmer has been an advocate for Berlin’s tech scene.
Even though he is in Germany, the US is Deerman’s target market for Moped. “That’s where the financing happens, that’s where the early adopter market is, and that’s where the higher concentration of people with iPhones, Androids, and tablets who are more willing to try new things are,” he says.
Deerman believes Berlin’s tech scene is still in its early enough stages that newcomers can make a splash. “Certainly in Europe, it is the best city to be in,” he says. But he’s realistic about the buzz: “Right now I think the perception of it is bigger than what it really is.”
[Disclosure: Lerer Ventures, Accel’s Seed Fund, and SV Angel are investors in PandoDaily.]