As the startup scene in Berlin flourishes, Hy! has emerged to showcase the scene and connect European startups with investors from around the world.
Hy!, founded last year, runs big events that can attract around 1,000 attendees. January’s event saw startups competing for prizes worth over $260,000. The top winners were knowable, a social network for makers; infogr.am, an infographics service; and Solarbrush, a robot that cleans solar power plants.
Below, founder and CEO Aydogan Ali Schosswald explains the strengths and weaknesses of the startup ecosystem in artsy Berlin.
Tech Cocktail: Tell us about the history of the Berlin startup scene.
Aydogan Ali Schosswald: In the past two years, the Berlin startup scene has grown exponentially and it’s become very clear and apparent that Berlin is already or is definitely becoming Europe’s #1 tech hub, just owing to commercial conditions – rent is so cheap, and labor is so cheap here, and it’s just very easy to start a company in that sense – but also since there’s just an abundance of talent. . . .
All of our friends who are investing in the US say they’re kind of sick of the rising valuations there and the ridiculous valuations that YC startups or grads straight out of Stanford ask for, and they’re looking for new markets to put their money. And since both culturally and in quality of tech, Berlin is not really behind in any sense, they’re more than interested into looking at this market where valuations are way lower – you can basically invest in a company at about 1/10 of the valuation you would have in Silicon Valley.
Tech Cocktail: What is unique about Berlin?
Schosswald: We had that hipster boom a couple of years ago that companies like SoundCloud emerged from. And that really hyped things up, obviously, because now suddenly startups have been not only a profitable thing but also a pretty cool thing, and basically the entire city of Berlin jumped onto this. . . . You have very close ties between the artsy community and the tech community, and I think that accounts for why so many media-related companies or design-related companies come out of Berlin. . . .
You can just see a very great synergy between the design community here (not necessarily artists, but really designers who are very close to the artist scene in Berlin) and the tech scene here, so all the tech products here have a very, very strong design component to them. They might be even slightly ahead of every other ecosystem. It’s a priority of every Berlin startup to nail that, culturally. (Editor’s note: see SoundCloud, Wooga, and 6Wunderkinder.)
We see thousands of products per year, and if you compare those to ones I see from companies in the States, it’s still this whole sort of “blue shirt and khaki pants” thing that’s cliche of Silicon Valley businesspeople – that’s how their presentations and pitch decks look, compared to the hipster, super-designed, and avant-gardish looks and pitch decks of the Berlin startups (a very apparent cultural element, not necessarily a good one).
Tech Cocktail: What are some challenges for the startup scene in Berlin?
Schosswald: Overcoming the seed bubble. It’s about self-sustaining the ecosystem further by having a few exits – I think that’s long overdue – or a few more IPOs. There hasn’t been really any major exit or major IPO since the early 2000s, so there’s been a lot of value creation, but very little that would come back financially or even reputation-wise. . . . The flipside of that would be a few companies have to fail. There’s a few hyped companies that have to fail, so the whole hype quiets down and the value-creating startups and the meaningful startups come out of the background and get a bit more attention.
We need more capital from outside of Europe and outside of Berlin, and basically we need all kinds of attention. . . . It still seems like a closed shop and a small community that sometimes lacks the means to make it onto the big stage.
Head over to their tiny, new URL, hy.co, to sign up for updates on the next event in early June.