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Will Berlin be Europe’s next tech hub?

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Will Berlin be Europe’s next tech hub?

For years, the centre of the European tech universe has been London and, according to analysts, London remains the continent’s top tech hub. The city’s tech sector received more than double the investment of its closest rival. But London’s closest rival is hot on its tail. As the spectre of Brexit grows larger, many have speculated that Berlin may overtake London as the primary destination for tech companies in the very near future—startups and giants alike.

German politicians are certainly hoping so. Shortly after the Brexit vote, German political party the FDP sent a brightly-coloured van to some of London’s tech hotspots emblazoned with the slogan “Dear start-ups, Keep calm and move to Berlin.” With London still leading Berlin in investment terms, it’s clear the big shift didn’t happen in 2016, and it likely hasn’t in 2017 so far. But with Brexit moving closer, is Berlin in prime position to take London’s tech crown?

Berlin is leading the way as business’ EU city of choice 

In April this year, banking giant Lloyds announced that, post-Brexit, it would move its European base of operations to Berlin, immediately establishing the German capital as a viable new location for businesses large and small.

Tech giants are following in Lloyds’ footsteps, with Samsung announcing a new European HQ in Berlin for its new venture Samsung Next a few months later. Samsung’s reasoning for this choice was, perhaps surprisingly, unrelated to Brexit. Samsung’s European managing director put it down to this: London is “not a fun place to live unless you are really rich.”

This statement isn’t as shallow as it may seem on the surface. London’s skyrocketing cost of living is a big deterrent for those looking to do business there, especially for startups. The price of office space in London rose by 70% between 2010 and 2015, and it’s only continued to rise in the past two years.

These prices have led to startups fleeing London’s most expensive areas, including ‘Tech City’ in Shoreditch. If businesses can leave the tech centre of London, would they move to a different tech hub altogether?

Berlin is more startup-friendly than London

Whereas London’s soaring rents are deterring startups, Berlin is offering a unique opportunity to found a new business in an affordable and supportive city that still boasts a rich tech ecosystem.

According to Talk Business, one startup is founded in Berlin every 20 minutes. The same article reveals rent is 71% lower in Berlin than it is in London. This will no doubt play a huge part in the cost-benefit analysis that plays out in a founder’s mind before choosing where to base their business.

One of the only significant hurdles for some may be the language barrier. As London Translations makes clear on the subject of German translation, in reference to John F Kennedy’s infamous “Berliner” incident, “German is a very precise language and it just goes to show how important it is to get it right.”

Thankfully, there are two options for language-cautious entrepreneurs. Either they can enlist the help of widely-available professional translators, or they can trust the English-language proficiency of Berlin’s citizens. So many Berliners speak English from day to day that a German minister recently complained about it.

Berlin still has tough competition

Despite Berlin’s prime position to take over as the premier tech hub of Europe, it is far from guaranteed that status. Other European cities have been intentionally wooing startups and tech firms in a bid to steal the crown. TechCrunch already christened the Netherlands as “the world’s high-tech startup capital”. Indeed, two of the world’s most successful technology firms, Uber and Netflix, have their European headquarters in Amsterdam.

Other contenders include Dublin, whose Silicon Docks area has been developing steadily since the 2000s, and Lisbon, whose “startup engines” are due to “roar” in 2017, again according to TechCrunch.

Then, there is the prospect that London could continue to be the destination of choice for the European tech industry. So far, the fallout from Brexit has been less drastic than expected, and the final deal the government makes with the EU could put London in a much better situation than previously thought.

Berlin may be leading the pack when it comes to London’s tech successors, but it’ll take work and innovation to stay at the front. Especially if London goes down fighting.

I am the founder of Startup Today. I am the main writer and have put in many hours of work into creating this blog. If you want to find out more about me then lets get in contact.

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