Berlin's startup community is buzzworthy, let's make it lasting

By Dr. Ijad Madisch , written on March 6, 2013

From The News Desk

Much has been written about the emerging technology scene in my new hometown Berlin, where I moved after spending several years in Boston. The credit often goes to people like Alex Ljung and Eric Wahlforss of Soundcloud and Jens Begemann and Phillip Moeser at Wooga, who have built successful startups that reach a global user base. But there’s far more potential for a thriving tech scene here.

It’s an ambitious goal, of course, and getting a sustainable startup community up and running will require more than a few hits and a clever nickname starting with "Silicon." (In case you’re wondering, in German, Silicon Valley would be Silicon das Tal.) We’re facing hurdles in Germany that are similar to those in the US startup industry: attracting talent from outside the European Union (i.e. immigration law) and finding proper infrastructure to allow new companies to prosper.

There’s one big difference, however. In Germany, it’s far more difficult to raise capital from both national and international investors.

Thursday, March 7, marks an important day for our industry. German Chancellor Dr. Angela Merkel and Minister of the Economy Dr. Philipp Rösler are going to draw awareness to the German startup scene by making a visit to my company, ResearchGate, in addition to Wooga, to understand more about what our companies do, how we built them, our plans for growth, and the investment climate in Germany. I realize that a visit by the head of state to a tech company may seem mundane to many Americans, but in Germany it is exceedingly rare.

I hope we can share with the chancellor that while we have had some success, and we will pass on our lessons to future entrepreneurs, we need support from the government as well as from investors and the industry to shape a framework to allow our small but growing startup community to get to the next level.

First, we need help in creating an Investment culture. Getting funding from German investors is a challenge. I know this from experience. I pitched to several German investors. While I was talking about my vision, all they wanted to know about was prospective revenue. That was before I met an American, Matt Cohler, a creature of Silicon Valley. When I told him my goal was to one day win the Nobel Prize with ResearchGate, he didn’t blanch. On the contrary, that made him want to invest in us.

Cohler, like many Silicon Valley investors, is convinced that disruptive ideas have the highest potential for profit. Once you’ve changed the system, the moneymaking part is fairly easy. I believe German investors need to adopt this startup spirit. They need to be braver and understand that high-risk investments can take a long time to pay off, especially when we’re speaking about big ideas. What it takes to make these investments worth their while are large amounts of money and a heaping portions of patience. Once national investors prove their trust in the industry, I’m sure international investors will follow suit.

To be fair though, it’s not all up to them. The government should take on responsibility, making sure that legislation incentivizes national as well as international investment instead of stopping them. This is in their interest as tech startups are one of the fastest growing industries in the country.

Another area that the German government could assist in is talent, which is a universal issue for our industry. As in the US, we need more qualified engineers. Suitable candidates from outside the European Union are often interested in open positions, but administrative challenges make it difficult to hire them. We’ve had cases in the past when it took months of paperwork until an engineer from a non European could start work. Startups move fast. Hiring needs to be fast.

The government is already taking steps in the right direction. Both the current administration and industry have to go further, though. It’s not only about eliminating hurdles; our goal needs to be to make Germany the place to go for international talent.

In Silicon Valley it’s popular for people to wear their company t-shirts because they’re proud of where they work. To establish this pride you have to allow talent to live up to their aspirations in their job, and create an environment in which they can flourish and feel at ease. At ResearchGate, for example, we have a whole floor devoted to resting and playing and a “feel-good manager” who helps our international staff settle in. No other German company, to my knowledge, does this.

The final contribution government here can make involves the tech Infrastructure. While an idea can start in an apartment amongst friends and colleagues, to scale a business you need adequately wired buildings and related infrastructure. Rents in Berlin have been cheap in the past and even if they still are in comparison to other European capitals like London or Paris, they’re also on the rise.

Our industry is partly responsible for this. We bring investment to the city, create jobs, and attract people. As a result, rents become more expensive. What we ask for is more room and proper infrastructure to grow. This means that public transport, which shuts off late at night, needs to run at all times to get people to and from work (on time). We need more and better international air travel connections to strengthen ties worldwide. The first batch of Berlin startups taught us this lesson: you can’t just think locally, to make it you must be global.

I'm thrilled Chancellor Merkel is taking an interest in our thriving startup community in Berlin. I’ll tell her we need her help. I hope she listens.

[Image courtesy rintakumpu]