Berlin is the hotspot of the startup scene in Germany
by Andreas Nölting at November 21, 2019
With our office in Berlin Mitte, we feel right at home. We are reporting on the hip environment with numerous IT talents and founders.
If you are looking for the home of Caspar Health, you’ll need to head to the heart of one of Berlin’s trendiest neighborhoods, to Neue Schönhauser Straße 20, an iconic courtyard building moments from Hackescher Markt. The sidewalks are bustling with young people from all over the world, the streets are lined with fashionable stores, busy pubs, and delicious restaurants. If you are looking for stores that accept cell phone payments, this is where you should come. Hipsters fill the cafés, working on their laptops and communicating with the world. The ecosystem is right in Berlin-Mitte – it’s where the rare and sought-after IT talents want to be and there is an established network of founders, universities and the main train station is not far away.
Of course, Caspar is not alone here. And there are some very good reasons for that. Berlin is, after all, the epicenter of the German startup landscape. Even as cities such as Hamburg and Cologne have become more attractive, Berlin’s startups still raised EUR 2.1 billion in the first half of 2019, three-quarters of the total startup investment volume in Germany. In 2018, according to the EY Start-Up Barometer 2019, Berlin’s startups secured 57 percent of the nationwide investment. A good 40 percent of all financing rounds in Germany involved startups in Berlin. The lion’s share of investment targeted FinTech and mobility companies, although eHealth has already risen to fourth place, with investment growing almost sixfold to EUR 303 million. “Berlin will retain its crown as the hotspot for German startups in 2019 and beyond,” concludes EY.
But even as more venture capital flows into the German startup scene, founders face a number of challenges, the biggest of which is recruiting the right employees to build their businesses. After booming for years, the digital economy job market is suffering. According to a recent , every second startup (50 percent) highlights recruitment as the most pressing challenge – ahead of tax (44 percent), legal (41 percent), and financing (34 percent). IT staff in particular, including programmers and data analysts, are in very short supply and can command very high salaries. And competition is correspondingly intense as hundreds of startups compete for the best IT experts.
According to the Federal Association of German Startups, Berlin is home to more than 9,000 startups with around 100,000 employees. Over the last few years, the city has developed an infrastructure to help and support founders, including state-funded technology and startup incubators, private startup factories, and coworking spaces, all of which offer founders the networks and infrastructure they need to turn their ideas into reality. Business angels and leading venture capitalists from all over the world are also on hand to provide financial support, and at countless startup conferences, such as TechCrunch, founders can pitch their business ideas and cultivate important contacts. What’s more, the Berlin Chamber of Industry and Commerce also offers to fund and consulting services specifically for startups. There are numerous research institutions, such as the Hasso Plattner Institute in Potsdam. The startup hotspot on the Spree River received perhaps its biggest boost just a few months ago when the Siemens Group announced plans to invest EUR 600 million in an innovation campus on the company’s historic site in Berlin-Siemensstadt.
One of Berlin’s major advantages is that so many venture capital firms and investment funds already have their German or European headquarters in the city – Atlantic Labs, e.ventures, and Think Health, to name but three. These firms ensure that promising startups have access to the capital they need to scale up, especially as traditional commercial banks are not always prepared to give them the funding they need. “Tech startups with innovative business models need to adopt a different approach to financing. They have few tangible assets, hardly any collateral, and normally cannot satisfy traditional financing requirements. At the same time, venture capital is still relatively new in Germany,” explains Andreas Haug, Partner at e.ventures.
The Caspar team is colorful and cheerful, multicultural, and highly motivated. Together, we want to revolutionize the German healthcare market and provide valuable healthcare services to people who have so far been neglected. We’ve certainly got our work cut out for us: 70 clinics now use Caspar, which is equivalent to a market share of just over five percent. We have just teamed up with Median and Paracelsus clinics, two of Germany’s leading hospital chains (150 clinics, approx. 19,000 employees), and, together with the ZAR Group, now count as the largest private rehab providers in Germany among our clients.
So the future is bright and reaching our full potential will mean bringing new faces, new experiences and new expertise to Caspar. Where the journey eventually takes us, no one can say for sure. But the destination for talented healthcare and IT specialists is already clear: Berlin, Hackescher Markt, Caspar Health. Because life is in full swing here, and we are at the heart of the action.