Investment in Berlin startups jumped by €1 billion this year, study shows

Venture capital investments in German startups hit a record level in the first half of 2017, with Berlin seeing a huge rise in funding for its startup scene, a new report shows.
Funding rounds for startups in Germany and the overall value of funding hit record levels in the first six months of this year, a report released this month by professional services firm EY reveals.

Investment Capital Berlin - Source: EY

The total number of investments in German startups rose by 6 percent in comparison with the same period in 2016, to 264.

But the really explosive growth was seen in the overall size of investment. In the first half of this year, €2.163 billion of investors’ money went into startups, an increase of roughly €1.2 billion in comparison with the first half of 2016.

That growth was mainly driven by the e-commerce sector. At €939 million, over 40 percent of overall funding went into e-commerce. But health, FinTech and software startups all saw significant investment growth.

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Berlin’s not perfect, but Samsung is right: it’s more fun than London

Felix Petersen, managing director of Samsung Next Europe, reportedly says that his company will not set up its headquarters in London. It’s just “not a fun place to live unless you are really rich”, is the rationale. Instead, Petersen and colleagues will set up shop in Berlin, hoping to find a home that is both far more enjoyable and affordable.

Club in Berlin - Photograph: Christian Jungeblodt for the Guardian

As a Berliner, I can give Petersen some idea of what he can expect.

Certainly, there are things to say about London, where I lived for 14 years before moving to Berlin. The last time I was there, very recently, a signal failure saw the cancellation of all trains between Paddington and Slough in the very middle of rush hour. No rail replacement bus services were arranged: people were simply expected to trek home with the aid of suddenly exorbitant taxi fares. For one of the most expensive transport systems in the world, there didn’t seem to be much bang for your buck. It seemed to be a fitting metaphor for a town apparently desperate to become Geneva-on-Thames.

One can see why Petersen’s eye might settle on Berlin, for it has long been seen as a mecca for tech startups, with its lower costs allowing them to recruit and retain young talent. Samsung’s arrival may mark a greater maturity of that market, allowing younger companies to rebase in a capital more easily accessible than London or San Francisco.

Petersen and colleagues will find much to love in Berlin. There are parks, lakes and forests within a short train ride, nightclubs on which the sun never sets. There are theatres, food markets, streets of endless bars.

. . .

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