BERLIN: THE DESTINATION UNDERMINING TECH CITY

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Like Silicon Roundabout, Silicon Allee is temperamentally serviced by public transport. The U1 – Berlin’s oldest U-bahn line– rattles through Kreuzberg just as grumpily as a Northern Line train to Old Street.

Like Silicon Roundabout, its denizens go to work in checked shirts and skinnies rather than suits and ties; the streets are lined with foreign delis and falafel joints.

The demographics and landscape are similar—but whispers suggest Silicon Roundabout has increasingly less clout in the European technology industry. Many of the world’s most powerful and innovative start-ups are selecting Berlin as their European hub. Alex Ljung and Eric Wahlforss, founders of megalithic file-sharing website SoundCloud, selected Berlin for their HQ back in 2007. Fab—the world’s fastest growing social e-commerce business—moved its London team to Berlin in October, and Kernel founder and editor-in-chief, Milo Yiannopoulous, has announced that The Kernel will now be operating out of Berlin as well as from its Clerkenwell office. Airbnb—which had raised $119.8million in VC funding by July 2011—has an office here.

Significantly, for those hoping for a speedy transition from roundabout to Tech City, Google has recently opened offices in trendy Prenzlauer Berg and plans to offer subsidies and mentoring to prospective entrepreneurs in the area. Organised funding remains elusive—naturally cautious German investors call venture capitalism risikokapital—but this vote of confidence from a technology giant is incredibly important.

So it’s not just small start-ups: these are some of the tech industry’s biggest hitters—innovative companies that incorporate social features and influence consumers worldwide. Why not London? Firstly: renting in London—even for dingy basements in Dalston—is far, far more expensive than a better, more spacious property in Berlin. This is especially important for young start-ups, trying to maximise their first round of funding.

Renting personal property is also cheaper, and many of the young creatives on the books of start-ups are bewitched by Berlin’s mythical club scene and world-renowned reputation for outlandish art and design. There is barely a language barrier—many Germans speak impeccable English—so even if you do move a workforce over to the city, the feeling of alienation is minimised.

By comparison, Silicon Roundabout is perceived as a bit of an eyesore on the edge of the City (which, like it or not, is still the British economy’s biggest asset). Critics argue that the Cambridge Science Park is a much more important space for innovation— especially as they watch Berlin selected over London. Many of Silicon Roundabout’s problems are congenital (rent isn’t going down any time soon) and thus not something that can be addressed with “initiatives” or increased funding.

Furthermore, as the economic squeeze tempts recent graduates to move abroad, taking their tech-savvy with them, Silicon Roundabout could see a vacuum of available labour. Although start-up founders often have a business background, staffs often constitute younger, recent graduates who want to join the revolution rather than hit the same old graduate scheme circuit.

In this context, it’s unsurprising that young entrepreneurs see Berlin as the more tempting alternative – poor but sexy. If London wants Tech City to thrive it will need to find an effective way to compete with this edgy, anziehend, rival.

Phoebe is an Editor at Berlin based Fab Europe, and has worked in both Silicon Roundabout and Silicon Allee.

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