Market Overview

Is Berlin a Sexy Destination for Startups?


Germany is an important part of the world economy. But where does it stand on young startups?

According to Dr. Hendrik Brandis, Managing Partner at Earlybird Venture Capital, entrepreneurs from all over the world come to Berlin to build their companies.

"I think there are three reasons [why]," Brandis told Benzinga. "(1) Excellent availability of academic resources. There are more universities than in other cities since Berlin had two complete infrastructures before the reunification."

At the same time, Brandis said that Berlin has the highest unemployment rate of all German cities. "Berlin had been basically de-industrialized after [the] second World War, so that there is now a vacuum," he said.

"(2) Very low cost of living (probably half of Munich and a third of London) and also significantly lower cost of doing business.

"(3) It is known as a very cool and cultural city these days. Artists, galleries and so forth came first."

When asked about the sovereign-debt crisis and how it has impacted the European economy, Brandis said that it "doesn't really play a role."

"First of all, Germany is doing really well these days," he said. "Public household almost balanced, lowest unemployment rate since 30 years, the economy is growing, and even more importantly -- optimism is all over.

"Second: Innovations are not correlated with overall economic cycles. We ride fundamental paradigm shifts in our portfolio like the shift from offline to online commerce. Or from circuit switched telco networks to VOIP or from on-premises computing to cloud computing and so forth. All these paradigm shifts will create tremendous business opportunities in every economic cycle -­ regardless if it is recession or boom."

While Brandis believes that startups have helped Europe's economic recovery "to some extent," he said that after seeing the new startup dynamic in Berlin, "I predict that will be even more the case in the future."

"In my eyes, it is key to support the euro, which I think will happen," Brandis added. "Secondly, we need an even better harmonization of financial policies.

"Thirdly, the reform processes need to be pushed forward and accelerated. In that regard I consider the current crisis [to be] a big opportunity. Just think about what changes could be implemented in just a few months in southern Europe. Only a year ago nobody would have thought that this [would] be possible any time soon."

Brandis may work for a venture capital firm that pours millions of dollars into startups, but his background is in aerospace engineering. "[I] spent three years in the R&D department of the military aircraft division of EADS (working on the Eurofighter, which actually flies with one of the patents I developed) before I joined McKinsey and Company to also learn about management," said Brandis. "I stayed at McKinsey for almost six years, became a partner, and then left in 1997 to co-found Earlybird."

"What is my experience as managing partner of Earlybird?" Brandis continued. "First of all, I love what I do. I think it is a great privilege to be able to work in and contribute to our industry. We had great successes in the past. Helping to build companies from the naked idea to big, successful organizations is more satisfying and rewarding than anything else in [my] professional life I can think of."

Follow me @LouisBedigian

Posted-In: Earlybird Venture Capital Hendrik BrandisEntrepreneurship Success Stories Be Your Own Boss Startups Tech General Best of Benzinga


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