Strengthening ties between Berlin & New York
Last week, New York International had the pleasure of welcoming The Berlin Senator for Economics Cornelia Yzer to the city for a four day trade visit. The senator met with some of New York’s best known startups, investors and senior figures from the community with the aim of building stronger connections between the two startup hubs. This wasn’t her first time in New York as a Senator having participated in the annual TEP Conference (Transatlantic Entrepreneur Partnership) in 2014.On the first day, CB Insights founder and CEO Anand Sawal presented an overview of the startup scene in New York and the trends of venture capital to provide some context for the rest of the week. Having recently posted an article titled ‘Berlin State of Mind’ discussing the startup scene in Berlin, we thought it would be timely to compare the two cities looking at the parallels, competition with other hubs and opportunities they both face.Growing presence of Venture Capital Worldwide, funding to VC-backed companies in the first three quarters of 2015 has already topped 2014’s year-end tally by 11% ($98.4B). Both New York and Berlin are ahead of the curve, growing rapidly when it comes to both the level of investment through venture capital and their reputation as a destination for startups. Interestingly, both cities have the same level of VC funding per capita.Germany has had the fastest growing economy in the G7 and Berlin is above the national average for growth. Since 2008, every 8th job in the city was created in the digital economy and startup jobs account for 3.4% of total jobs. The flurry of job activity is mostly down to the presence of venture capital in the city stimulating expansion for startups. 20 of the 30 highest funded companies across Germany are based in Berlin including #1 on the list, Delivery Hero who have raised a total of $657 Million. So far this year, almost $2.2B has been invested across 167 deals in Berlin. While in New York, $5.3B has been raised across 342 deals in 2015 and $17.42B has been invested across 2,367 deals since 2010 alone representing a huge increase.CompetitionSan Francisco is the benchmark which still dwarfs all other startup hubs in the world when it comes to Venture capital, tough competition in the U.S. for New York though the city is growing and considered to be at a tipping point. According to Chris Dixon, Partner at Andreessen Horowitz “There will be, in the next three to five years, 10 billion-dollar-plus companies in New York. There’s a certain minimum critical mass you need in a tech ecosystem and I think (New York) is now getting there.”Just like Silicon Valley, London is seen as the largest incumbent for attracting VC funding in Europe boasting $3.2B raised so far in 2015 (across 296 deals). Although this represents almost $1B more than Berlin so far this year, the German capital is growing faster than London and expected by many to soon overtake London in terms of overall funding due to the local infrastructure, lower costs & momentum the city has. One key challenge for Berlin is attracting US & overseas investors as German investors have typically been described as more risk averse by nature than their US counterparts. According to CB Insights, the level of US investment in Europe is increasing which presents an opportunity. In 2014 there were 106 unique VCs investing in European tech companies. The total is on pace to reach a four-year high in 2015.Therefore the timing of the Senator’s visit to harness some of the overseas investment made available by US VC Funds was perfect. Last week Senator Cornelia Yzer’s visit culminated in a dinner where she met 14 well known investors operating in New York. Making such valuable connections like this supports business relations between the two cities, specifically their startup eco-systems. For more information, the slide deck used by CB Insights has been made available here. Also, a good comparison would be our recent blog post on Berlin State of Mind offers an insight into the startup eco-system in the German capital.