In Berlin last week, over wine and canapés, the federal government took a big step towards the European startup scene, with an event marking the launch of the last of the government’s five startup landing pads. The others – in San Francisco, Tel Aviv, Singapore, and Shanghai – opened earlier in the year and have been steadily attracting startups since. The Berlin landing pad may be the last to the party, but it might have arrived at just the right time.
Each of the startup landing pads is designed to be a gateway into its local market. Australian startups accepted into a landing pad get three months’ desk space and introductions to local entrepreneurs, investors, and customers. The government is particularly serious about that last one. The landing pads are backed by Austrade, meaning startups can make use of government trade connections with foreign businesses. These kinds of meetings are an ideal way for governments to assist startups. They’re also key to Australian startups becoming relevant worldwide.
After all, the Australian market on its own isn’t big enough to build a globally dominant company. As Mick Liubinskas has observed, Australian companies need to be looking for customers overseas from an early stage. It’s not always easy for startups to do that from the comfort of their own HQ, which is where landing pads come into play. It’s telling that countries with much smaller markets than Australia, such as New Zealand, jumped at the landing pad concept well before we did. New Zealand startups know they have to branch overseas quickly if they want to survive.
Belated as our efforts may be, for the Berlin landing pad, now may actually be the best time to open. When the five locations were announced earlier this year, there was some surprise that Berlin was the only European city in the mix. London had been seen as the obvious choice by many for its strength in FinTech and its active investment scene. On the other hand, there were good reasons for choosing Berlin, as well. Its startup ecosystem grew faster than any other in Europe last year, and wages and living costs are far lower in Berlin than London.
Of course, that was all before Brexit. Although the lower value of the pound has made things a bit cheaper for Australians going to London, the Brexit vote has been a mixed bag for London startups, to say the least. For the month following the vote, the number of VC investments in UK startups halved and total deal value dropped by a third, relative to the same period in 2015.
In response, Berlin immediately launched a campaign to convince London startups to move to the continent, and it’s already bearing fruit. Local entrepreneurs have also been spruiking the city’s lifestyle. Despite the campaign, it’s worth pointing out that the UK’s more open regulations, particularly for FinTech companies, are still a strong argument in London’s favour. But with the uncertainty surrounding access to the single market and visa requirements for staff, many startups are preferring to hedge their bets with Berlin.
Obviously, Australian startups don’t have to choose between London and Berlin. The Austrade presence London is strong and startup-friendly, and Brexit won’t change that. It is another good reason, though, to base the landing pad in Berlin – a city where Australian startups have only had a small presence until recently. The pathway for Australian companies to do business in London is well worn, whereas Berlin remains largely off the beaten track. But as Berlin continues to grow, attracting established businesses as well as startups, the presence of the landing pad becomes more and more beneficial.
At the same time, Australian startups across Europe are beginning to band together. In July this year, Australian entrepreneur Jock Gordon launched Aussie.EU in Berlin. The initiative aims to build a network of Australian entrepreneurs, businesses, and investors based in Europe.
Much like the landing pad, the group is a place where startups looking to establish themselves in Europe can get help. Aussie.EU also intends to make things easier for European businesses who want to engage with Australia. No doubt the landing pad will be a welcome addition to this newly connected community.
As an Australian based in Berlin, I can’t wait to see the first startups hit the landing pad. In this respect, the government certainly seems to have saved the best for last.