Startup city: Berlin as tech magnet

After Lucas von Cranach founded a soccer community app in the city of Bochum, Germany, in 2008, he grew to realize that a move to Berlin was the best way forward for his company, motain GmbH.

“We needed to change the mindset of our company, and bring in international staff, and it is easy to persuade people from around the world to move to Berlin, which is a very young and trendy city, and an inexpensive place to live,” says 35-year-old Mr. von Cranach, who made the move in 2010.

“Today, motain employs 45 staff with fifteen nationalities, including from the U.K., Brazil, Australia, Italy, France, Poland, Romania and Macedonia, and for senior positions above a certain salary level, a work permit can be processed in a couple of months,” he says.

The motain office is in Mitte, the former district of East Berlin where the digital startups are mostly clustered. The nearest U-Bahn station, Rosenthaler Platz, was one of the so called ghost stations that were left unused for 20 years after the Wall divided the city in 1961. After the wall came down, young people moved into Mitte to take advantage of low apartment rents, and this creative community, combined with cheap office space, led to Mitte emerging as the epicentre of the digital startup scene. Central planning and economic stagnation have given way to venture capital and entrepreneurship.

Small- and medium-sized businesses (the Mittelstand) form a strong backbone of Germany’s economy. The country ranked 6th in competitiveness by the World Economic Forum’s 2012-2013 report, and 3rd in its capacity for innovation.

Despite the global success of iconic German brand names such as Siemens, Adidas and Volkswagen, Germany’s corporate sector has a relatively low level of dominance by large corporations compared to other countries, and the government is keen to promote new winners.

“These are the next generation of hidden champions, the foundations of Germany’s and Europe’s future success,” says Juergen Friedrich, CEO of Germany Trade & Invest, the economic development agency of the Federal Republic.

Mr. von Cranach’s motain has recently been enjoying a surge in global interest in the app, which goes under the name iLiga in German speaking countries and THE Football App in other markets, and in April announced an investment of about $13-million from Earlybird Venture Capital.

Earlybird itself moved its entire Hamburg team to Berlin in 2011, in order to be at the centre of things. It also has offices in Munich and Milan.

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