It’s no secret that the Brexit vote disrupted the London startup ecosystem. Following the announcement of the British referendum’s result in June, many people are wondering how this will impact the London Startup scene and how is it going to change.
In 2015, London was elected as the best place for startups in the European Digital City Index but will the city keep the same status in 2016? As a matter of fact, Berlin, the second largest startup hub in Europe, didn’t waste time by calling entrepreneurs to settle there with the message: ‘Keep calm and move to Berlin’.
“Berlin is a boom town for companies focusing on fintech, ecommerce, mobile apps and a growing number of multinational companies are coming into town, opening incubators, accelerators, digital units to co-operate with the startup community.” said Cornelia Yzer, German senator for Economics, Technology and research in the government of the State of Berlin.
She also reported that more than 100 startup companies in London are looking into relocating to Germany’s capital following the UK’s decision to leave the EU.
Travis Todd, Silicon Allee’s founder, a group building a six-floor campus for startups in central Berlin wrote on his website: “It’s an exciting time for Berlin because the city itself is still adapting, growing and finding its creative potential. Luckily for tech startups, the government has embraced the new economy and is trying to help out where they can.”
The German senator also warned companies based in London that staying in UK after they leave the European Union will damage their businesses, and she says that Berlin will provide resources that will help them relocate.
Before voting out of the EU, the British tech sector clearly expressed that they were against the idea of leaving because of the uncertainty around what the contentious referendum will mean for the sector in the long-term. Indeed London will become a city which will give access to a single market when other cities like Berlin can offer a bigger door to the European continent.
Here are a few facts about both cities that can help companies decide what is best for their businesses (based on 99designs):
- It’s easier to launch your own new tech firm in London: a company there can be created in less than five days and registered online for €18. That’s compared to less than seven days in Berlin at €650.
- Corporate income tax in London is 25 percent, whereas in Berlin it’s 33 percent.
- Cost of living in London is 43% higher than in Berlin and rental prices are 70% lower in Berlin.
- London has a bigger startup ecosystem, about 275,000 startups in London compared to 171,000 in Berlin but Berlin is the world’s fastest-growing startup city (one startup is founded every 20 minutes in Berlin)
For quite a while now, London has been able to make the strongest case for being THE European start-up capital. It’s topped the league tables when it comes to deals and funding. But Brexit may change all that. It will increase competition between EU member states to attract talent and technology in a post-Brexit Europe.
For a long time, the start-up and venture capital scene has been looking for ‘the’ European alternative to the Silicon Valley. Now there may be the chance for several, not just one, alternatives to emerge. Cities across Europe will want to take that opportunity.
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