As the founder of fundraising service Spendino, cofounder of The Entrepreneurs Club, an organiser of Startup Camp and Failcon, member of the Bundesverband Deutsche Startups and mentor at Startupbootcamp, Sascha Schubert is well positioned to reflect on the state of entrepreneurship in the capital.
VentureVillage spoke with Schubert to find out why the Berlin startup scene needs to catch up fast and how the entrepreneurial vibe in the city was actually at its peak ten years ago…
We started the Entrepreneurs Club for our own benefit
In 2005, when we started the Entrepreneurs Club, it was the only network for startups in Berlin at the time. Entrepreneurs Club is doing its thing to help people start a digital business. The first event we did was egoistic – there was no network, we wanted to build our own one.
When people are new in town that’s the first thing they do – throw a party to get to know people. So that’s how Startup Camp began, too.
Politicians care about startups… during election year
Definitely part of the reason the Minister of Economics and Technology, Philipp Rösler, is involved in Startup Camp this year is because it’s election year. There’s also the ‘aha!’ effect – politicians are realising that startups are going to be really big, because after 2001 everyone thought the internet and digital economy was dead, especially politicians. Now they are re-thinking this.
In 2005, we asked the old networks in Berlin for support and they said, no, the internet is over. Today, about 35,000 people are employed in the digital field in Berlin – it’s fastest-growing sector in Berlin.
We thought the political side was missing from the startup events scene, so we started Bundesverband Deutsche Startups – now we have 150 members.
Think Berlin is a startup hub now? It’s nothing compared to 10 years ago
In 2000/2001, we had something like 50 incubators and accelerators in Berlin and 35 VCs had offices here. In 2003, there were three international VCs with offices in Berlin and zero incubators. When there is an economic downturn, VCs stop investing abroad and only invest in what’s around them.
Now, we’re experiencing the second wave of internet startups – ten years ago, a lot of companies went public and there was a lot of money going into startups. Berlin was a major hub. And now, comparing the numbers, 35 VCs – there isn’t that many again yet.
Questico, a company for horoscopes and TV shows, received tens of millions of funding in 2000, which was a typical funding round at the time. We are so far away from that now. At that time, you went public and received over one hundred million – it was normal.
Berlin startups are in a risky position
Most of the companies in Berlin are really young. It is a dangerous age. You never know what will happen in an economic downturn. The ecosystem isn’t the best in Germany and it is really hard to get big funding rounds from German investors. And it’s harder to get $50m funding rounds in the US if you’re a German startup. Getting more than $10m is very difficult.
Germany needs its own startup ecosystem
We need to build our own ecosystem, and I think in Germany there is enough money for that. But it isn’t invested in startups, it’s invested in green economics. Maybe €200bn is being poured into shifting from nuclear to green energy. It’s important, but it’s also important to close the digital gap – we are five years behind the US. Five years from a knowledge perspective, from the ecosystem we are 20 years behind Silicon Valley. But when we get the right direction, we are very fast at closing the gap, we’re quick at executing things.
Startup Camp is purely an act of altruism
No one is driving a Porsche from working for the Entrepreneurs Club or Startup Camp. Sometimes I ask myself why we’re doing this! I don’t even know if Startup Camp is needed any more, because there is so much competition.
This year, we’re aiming for 600 participants. We always want more than the year before. Let’s not build it with less work, let’s do it bigger. It doesn’t always make sense!
We have 60 speakers so far. It’s really hard to get big names from other fields to startup events. But even that is changing, they see that something is going on and want to be a part of it. We also introduced a pitch marathon as a lot of people wanted to know how to get in touch with investors and raise money.
Something like 70 per cent of startups fail. The best way to become successful is to try, and try, and try. Good entrepreneurs do something else after they fail the first time.
We want to change the way people think about failing. Only Silicon Valley accepts it, not even the rest of the US. We have to respect the people who fail and try again and again.
Look at Angry Birds, it was something like the 43rd game the Rovio guys developed, but it was the first that worked.
The Failcon conference can be therapeutic
Failcon was the first time a lot of people could speak openly about their failures. It was cathartic for people to share their failures. You have to remember, getting rid of employees – it’s part of the job. If you don’t change, you lose. Startups bet on the future and failure is a part of that. And it’s not a bad thing.
My first internet company failed – it was a social network for women. A lot of women liked the idea, but dating was so strong in that field, I think it didn’t work for that. We didn’t have the perfect team either, we couldn’t get funding.
One company’s failure can be another company’s win
You can get really good teams from failing companies. When studiVZ was going down, it was really easy to hire technical talent from them. They built a really great team – everyone tried to get them!
The future will be all-digital
SaaS is going to be big in the future. ECommerce is really boring for me, but you can’t deny it is successful. I think someone will start a really good location-based mobile social network service. I don’t know why it doesn’t exist yet, maybe people don’t want to share their information.
Everything will become digital soon. There’ll be no printed newspaper and in five or ten years we’ll remove our post boxes. I’m looking forward to that.