Published in October 2013, this piece was a roundup of the ten startups in Berlin causing the greatest buzz, according to the local commentators, investors and entrepreneurs I surveyed.
Berlin has been the most talked-about (and talked-up) startup hub in Europe for several years. However, a backlash of sorts has emerged over the past year, with some asking when Berlin will produce an exit of global significance. Of course, there have been successful exits: Jamba in 2004 ($273 million/£180 million), Brands4Friends (€150 million/£129 million) and Citydeal (€130/£109 million) in 2010, and DailyDeal in 2011 (around €130 million/£109 million) are evidence that Berlin can deliver. “People expected it just to happen, but it takes three to five years,” says Sven Schmidt, a venture partner at Accel.
Jörg Rheinboldt, an early-stage investor and long-time observer of Berlin startups (he sold his ecommerce site Alando to eBay in 1999 for £28 million), has been advising the German government on tech. Recently, he’s noticed a growth in accelerators and incubators, such as Axel Springer’s Plug & Play, Berlin Startup Academy, The Factory and initiatives from companies such as Mozilla, Microsoft and Google, as well as an increasing number of events and conferences. And there’s easier access to capital — Berlin attracted €173 million (£145 million) in VC funding last year.
But some of the companies that have been seen as exemplars of the city’s standing in the tech scene, such as SoundCloud, have yet to make money. Rheinboldt sees a coming together of maker events and hardware: “It’s super early but I have the impression that there will be more startups that are hardware oriented.”
1. GetYourGuide, Erich Weinert Str 145, 10409
In 2009, Johannes Reck, Pascal Mathis and Tobias Rein had spent the previous year building a peer-to-peer travel network where users would sign up for — or offer to host — ctivities such as wine tastings or city tours. But things weren’t going as hoped. “We went back to square one and rebuilt the entire business plan,” Reck says. “We realised there was a huge opportunity in the things-to-do market where you have thousands and thousands of suppliers around the world — Stasi tours in Berlin, tickets without queuing for the Empire State building. All these things were not online yet.” The peer-to-peer model was ditched in favour of one where third-party vendors use GetYourGuide as a platform for their services. The site, according to Reck, is now the largest platform on the web for booking activities of all kinds. “Our goal is to digitise all the things you can do,” he says. The company, which employs 100 people, takes a commission on each booking. Seed funding came at the end of 2011, when Brent Hoberman from ProFounders Capital invested £1.3million. “That transformed our student business into a proper business,” Reck says.
2. EyeEm, Brunnenstraße 9a, 10119
The mobile photo-sharing app is two years old and, in January, briefly overtook Instagram on the iOS app charts. Why? The company reacted to the furore over Instagram’s terms and conditions by announcing that its users would retain rights to their images. “In terms of series-A startups, it’s the one I’ve got my eye on,” says Aydogan Ali Schosswald, a venture partner at Deutsche Telekom’s incubator hub.
3. Wooga, Saarbrücker Straße 38, 10405
Wooga is the third biggest games company on Facebook, with 50 million active online users per month, yet founder and CEO Jens Begemann has been thinking beyond the social network for some time: at the end of 2011 the company released its game Diamond Dash as an iOS app. It was downloaded 50 million times. At the end of 2012 the company repeated the exercise, on Android. “It’s not that we’re exclusively going to mobile, but it’s our first focus,” he says. “For all the new games we do them mobile first, because to make a true and great mobile game we need to make the most of what’s special about mobile.” Wooga has developed a reputation for relentless, granular A/B testing of its products, but the company’s move into mobile has meant a shift in focus. “It’s easier to do analytics on a PC, as the games are on the web, than on mobile. On mobile the market is different: analytics are still important, but there is more focus on testing. So we invite people to our offices and play a game, and we observe them and see how they react. Games are very human.”
And the shift has caused a corresponding change in the company’s business model: 18 months ago its revenues were entirely from online products, now 50 per cent come from mobile products. The company, which has 250 employees from 41 different countries, is growing at a rate of two new employees per week and is planning multiple launches. “We were lucky to have the right timing in the shift to mobile,” Begemann says. “Not too early, not too late.”
Ones to watch
4. ResearchGate, Invalidenstraße 115, 10115
Founded in 2008 by doctors Ijad Madisch and Sören Hofmayer, and computer specialist Horst Fickenscher, ResearchGate — which connects scientists, data and research — has grown into a category leader. The platform, with 2.9 million members, recently received series C funding, led by Bill Gates, which brought investment to £23m. “This is a great case of US investors giving founders the choice of where to be based,” says Philipp Hartmann, from Rheingau Founders.
5. SoundCloud, Rosenthalerstraße 13, 10119
It’s impossible to write about Berlin without including SoundCloud, the city’s poster-child startup. The biggest streaming site in the world, it has 38 million users, with five per cent paying for Pro access. It introduced advertising features in March 2013 to drive revenue (it has yet to turn a profit). “It’s at the scale where you can consider it a platform,” says Ciarán O’Leary of Berlin-based VC fund, Earlybird. “It was a sharing thing but now media companies are embedding it.”
6. The football app, Münzstraße 19, 10178
With 3.5 million monthly active users (1.5 million a day), The Football App is a mobile service providing news and data from 100 leagues across the world. Founded in 2009, it’s been bootstrapped by entrepreneur Lucas von Cranach but recently received €10 million (£8 million) in series A funding from Earlybird Venture Capital. Its uptake is strong in Germany, France and the UK and looks set to compete well in a marketplace shifting to mobile.
7. Trademob, Friedrichstraße 126, 10117
A mobile marketing platform that claims to reach 500 million smartphone users in 190 countries, Trademob offers clients optimisation technology (the algorithm switches between ad networks, for instance), and tools to see how campaigns for mobile apps are performing. Clients include Wooga, eBay classifieds and Universal Music. The company raised $15 million (£9 million) in series B financing led by Kennet Partners in November 2012.
8. Sociomantic, Paul-Lincke-Ufer 39/40, 10999
This real-time-bidding ad platform is a strong example of a business built under the radar: founded in 2009, Sociomantic isn’t a typical Berlin hipster startup. Rather, the business-to-business platform finds and accesses consumers who are searching online and delivers historical data about them to e-commerce platforms. Sociomantic is privately owned, but is thought by analysts to be profitable in the tens of millions of euros.
9. Clue, Bethaniendamm 19, 10997
“Clue is a period and ovulation tracker that predicts when a woman’s next period, fertile window and PMS will be, so she can make the right decisions,” explains founder Ida Tin. The platform was only recently released but has investment from the founders of an online property site. Users input physical and emotional data, and the app calculates events such as ovulation. All data is kept on the user’s handset. The business model is based on hardware that has yet to be disclosed.
10. ReBuy, Kanalstraße 139, 12357
It’s rare to find someone who doesn’t have unwanted DVDs, books, video games and mobile phones in their homes. ReBuy is a recommerce platform that allows consumers to sell unwanted products for a fixed price — and helps businesses unload extra stock. Sales were in the region of €40 million (£33.5 million) in 2012 and, in March, Iris Capital led an expansion round of finance with an undisclosed amount. “This is one of the greatest founder stories in Berlin,” says Rheingau Partners’s Philipp Hartmann. “The founders started this venture out of their kids’ rooms.”