Let’s all CHILLAX about the Berlin startup scene, says VC

Poor Berlin startup scene: there’s so much pressure on it right now.

VC’s are saying that it has to deliver in 2013, or else. There are doubts about where media darlings like Amen are going. Might the entire Berlin scene – with its focus on lifestyle startups with a B2C orientation – be in danger now that the pendulum swings back to B2B? Why is there not more money flowing into Berlin? Why are Berlin startups not doing more exits, says Harry Nelis from Accel? Questions, doubts, fingernail biting.

On the other hand, there are the rumors about more money flowing into the scene – Axel Springer pumping another € 50 million in it! And Rocket Internet (or Zalando) going public.

So what to make of it?

Nothing at all, says Ciaran O’Leary, a VC at Earlybird who blogs under the name ‘BerlinVC‘ and who invested in 6wunderkinder. We should all chillax about the Berlin scene and stop worrying. He also says that he feels partly responsible, because he did some of the flag waving about the Berlin scene in the international press.

First of all, he says, there’s no way Berlin will prove itself (or disprove itself) in 2013: “Berlin’s tech community is way too young of an ecosystem for it to be a “make” year and there are way too many folks building and growing great companies for it to be “break” year.”

Here’s how long other ecosystems have been running, compared to the Berlin scene, he says (I made the graph based on his numbers:)

For a hub with a short history, Berlin did some nice exits already, O’Leary points out: Zalando is currently priced at $ 3 bn on the secondary market, Brands4Friends sold for $ 200 m and Citydeal for $ 1 billion.What is happening in Berlin fits into a new phenomenon that he calls the “Urban Entrepreneurship Hypothesis” (needs some rebranding if it’s to catch on, if you ask me):

• The internet has liberated entrepreneurship. You can build and scale / distribute products and services from anywhere.

• Capital is increasingly mobile. We’re invested in a Berlin based seed stage company called Moped; we (Berlin based fund) led the round and our friends from Betaworks (NY), Lerer (NY) and SV Angel (Valley) joined in. Versus.io just raised from Dave McClure and a German semi-state fund (what a combo!). This has become standard (…) its becoming less and less relevant where you are based

• Key to building a tech company and a community of many tech companies however remains the ability to attract and retain top international talent

• International, talented folks have a strong preference for inspiring, english-speaking urban environments with a high quality of life

He even found time to make a nice powerpoint:

So, he says, places where it’s nice to live and where you can order coffee in English will become hubs, and Berlin is still in a very good place: “The shift to urban centres is a long term mega trend and we’re in the middle of it here in Berlin. Long term.”

What do you think?

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