However, Ljung admits his firm’s new hometown doesn’t cover all bases. “With start-up life, there’s never really much calmness. It’s all jet and no lag,” he says. “In an average month, I spend about a week-and-a-half in Berlin, about a week in San Francisco and the rest of the time split between Los Angeles, New York and London.” What Berlin lacks that San Francisco has is the sheer volume of people who’ve grown tech companies, where Ljung says he can bump into others who have trodden the same path, and who can advise him on short-cuts and pitfalls. In New York, London and Los Angeles, he can meet plenty of people with money to invest in good ideas.
According to Bernstam, investors from the US are scared to invest in Germany because they don’t understand the way companies are structured and corporate regulations. “We don’t understand what could happen if future investors tried to dilute us,” he says, “and investors from the States don’t understand yet how that works abroad – and are frankly scared of investing abroad.”
All of which created a chicken-and-egg problem in Berlin. Some entrepreneurs have stayed away because of the lack of investors, and those with the money have preferred to go elsewhere because of the greater number of companies to invest in.
But this resistance is beginning breaking down, on both sides, according to David Knight, editor-in-chief of Berlin tech scene blog Silicon Allee. “There’s been this streak of creativity and once you got a core of people, which started round 2009, you started to get a lot of investors from the US and Europe looking to Berlin. It’s still at a very early stage, but there’s a lot more money now than there was two years ago.”
Districts such as Kreuzberg, Neukoelln and Prenzlauer Berg, where would-be entrepreneurs congregate in the bars and cafes offering wi-fi, are now seeing the effect of this. In Prenzlauer Berg, Factory, which received €1 million in funding from Google, has rented space to over 15 companies, including SoundCloud. The city also now has a lot more of what might be called serious business people. Florian Lanzer is trying to build a website selling green products to people who are not necessarily committed environmentalists. He said the project has attracted a lot of interest, including the involvement of a former CEO of Sony Germany.
“What Berlin gets right is that it attracts the right kind of people,” says Lanzer. “Young people with talent and people with long track records and massive experience are coming together.”
Around a decade ago, Berlin was famously described as being “poor, but sexy” by its mayor, Klaus Wowereit. The hope is that creativity and commerce is now beginning to combine in tech in such a way that it might finally shed its poor tag.