FiBAN has so far brought business angels to Tel Aviv, London, and Stockholm. These trips enable better networking and international cooperation. The trip to Berlin was also a great opportunity for FiBAN members to get to know our Nordic partners in Denmark and Estonia.
The culture in Berlin is very open, “Scandinavian”, and relaxed. There is a lot of optimism towards the startup scene and there is a lot of venture capital available. According to the people we met, the special appeal in Berlin is the low cost of living and the general creative buzz - also inspiring the startup scene. What Berlin lacks in knowhow in industry tech it compensates with arts, music, and film. But as in any big startup city in Europe, the competition for good coders and developers is fierce. It was great to notice that there is a lot of interest for Nordic startups in Berlin and an increasing activity towards the Nordics. This is the time to step up and become more active about Berlin.
Berlin has a lot of potential to offer for both investors and startups
“There is a lot of money to be invested in Berlin and in comparison, Nordic startups have very reasonable valuations compared to what VCs in Berlin might be used to. We, angel investors, should be much more active in bringing good cases to Berlin”
– Janne Jormalainen, FiBAN board member and angel investor
One learning from the trip is that the Berlin startup ecosystem is very strong in e-commerce and online-marketing. So it is not a surprise that strong companies like Zalando have been born here. It seems like the SME sector in Germany is the next one to be disrupted by digitalization. Samuli Sirén, founder of Redstone Digital, said that “everybody expects digitalization to disrupt the market, but not in their own sector” , and this is something they have used when building their 'venture as a service' – concept. Germany is big in industry and logistics, so IoT as well as digital solutions in these areas can give great opportunities for startups. The delegation found for example the corporate venturing model that Redstone Digital presented as very interesting. Similar models has not been sighted in the Nordics so far.
“It was interesting to notice that the traditional operational models for accelerators and VCs seem to become a exception in Berlin. For example Redstone Digital and Project A Ventures are some examples of players that are rethinking the traditional ways of venturing”
– Torsti Tenhunen, FiBAN chairperson
There are strong VCs but not any big angel investor networks in Berlin
From an angel investor perspective it is interesting that there is no one strong network in Berlin or Germany, but rather several smaller syndicate groups. We met with Business Angels Club Berlin-Brandenburg and SB21. Both smaller groups that invest together in startups. An interesting note from the angel side was that it seems that a couple of years ago, the Berlin scene was still not very “hot”. Now, after the success of Rocket Internet and companies like Zalando, many VCs have started their offices here, competing for the best deal flow. This in turn seems to have driven up the valuations of many companies. The bubble is stabilizing, but there is still a lot of money around and this might not be the best for the startups or investors.
“The business angel activity in Berlin is not as organized as it is in the Nordics - especially not for non-certified angels. There is a lot of potential in this scene that could be a very interesting opportunity for active Nordic business angels.”
– Torsti Tenhunen, FiBAN chair person
As a conclusion,there is a lot of potential in Berlin and Germany for Finnish startups. The main startup hubs are Berlin, Hamburg, and Frankfurt. The Finnish Embassy in Berlin is together with the other Nordic countries trying to support startups. One alternative for startups is to get investment from a Berlin-based VC or then to take part in an acceleration program like Axel Springer Plug and Play or Techstars Berlin. As FiBAN strengthens the cooperation in the Nordics, Berlin will clearly be a natural next step in the future for both angel investors and startups.
Text and pictures: Helleke Heikkinen, Deal Flow Manager at FiBAN
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