While Silicon Valley is considered to be the Mecca of startups, local hubs have been emerging and rapidly growing all over the world, offering a supportive ecosystem for startups and entrepreneurs. Two of the most notable ones in recent years are Tel Aviv and Berlin.
Israel has long been dubbed “the start up nation”, and its power as a hotbed for startups continues to grow every year, with countless startups and several impressive acquisitions in the past year alone. The average acquisition in the first half of 2015 was 98 million dollars, 51% higher than the average exit in 2014, which was 65 million dollars. The total sum of merger and acquisition deals in 2015 has already passed that of 2014, and we still have nearly six months to go. Berlin’s startup scene, which gained the nickname Silicon Allee, also had a great year in 2014, with 24 acquisitions and 2 IPOs, and a 140% increase in funding from 2013.
The Tel Aviv and Berlin startup scenes definitely have a lot in common, even before you look at the tech industry itself. Both cities are in countries that have a lot of history, and have experienced very painful wars that have left a deep impact on its individuals and the society as a whole. Though there isn’t a direct connection between this fact and the two countries’ booming tech scenes, I can easily see how this would serve as a catalyst for young entrepreneurs.
The startup scene itself also has many similar aspects. Both hubs are heavily supported by huge, multinational corporations that hope to gain from the local entrepreneurs’ creativity and ingenuity. Google has campuses in Tel Aviv and Berlin (though the larger Google campus in Germany is actually located in Munich), and many accelerators sponsored by companies such as Microsoft can be found in both cities. One of the companies to recognize the increasing potential in both of these startup hubs is ProSiebenSat.1, and it’s pitch day competition, 7VPD. The competitions takes place in three locations each year, London, Berlin, and Tel Aviv. Interestingly, while the London and Berlin competitions are global and open to participants from around the world, Tel Aviv’s 7VPD is focused on Israeli startups. This year, the Berlin 7VPD took place in early June and focused on health and sports startups. The 2015 Tel Aviv competition will take place in December, as it did last year as well.
Both startup scenes are heavily centered around one geographic location: Torstrasse in Berlin and Rothschild Blvd. in Tel Aviv. Since many entrepreneurs often work and live in these areas, it helps to create a social environment that attracts relevant events and establishments like parties, professional gatherings, and new bars and clubs.
Both Berlin and Tel Aviv enjoy a variety of startups that run the gamut when it comes to type and industry. In both cities you can find incredible entrepreneurs active in every field from bio-med to ad tech, constantly looking for new ideas and new problems they can solve (as opposed to the Finnish startup scene for example, which is very heavily focused on gaming).
There are also some clear cut differences between both hubs. In addition to the obvious cultural difference, two significant differences are affordability and diversity. As far as rent and cost of living, Tel Aviv is significantly more expensive than Berlin, and entrepreneurs at times find it very challenging to maintain offices and pay rents in central Tel Aviv, which are in high demand. Berlin, on the other hand, is relatively inexpensive (especially when compared to Western Europe) and rent, as well as other overhead costs even, in the center of Berlin will be much lower than average in the region.
Another key difference is diversity of staff. While Berlin tends to attract talent from around the globe, most Israeli startups have a predominantly Israeli staff. The affluence of high quality talent in Israel is largely attributed to its mandatory military draft. The IDF is very technologically savvy and provides soldiers in tech units the highest quality training available, which they can lean on once they emerge into civilian life.
Both the Tel Aviv and Berlin Startup scenes continue to grow and evolve with every year, and even every quarter. The growing number of success stories and successful acquisitions drive young talent to go the entrepreneurial route and push their ideas to the limit. The success not only provides a great source of pride (and redemption, some would say) for both countries, but also act as a source of motivation for its younger generations, which could be a significant driving force behind their future economies. I’m looking forward to seeing how both the Berlin and Tel Aviv startup communities continue to grow in years to come, and how this growth will affect Germany, Israel, their relationship, and the global startup community.