FFE Magazine

German mayor eyes start-ups to generate Jobs

by FFE EU News staff

Berlin’s mayor Klaus Wowereit has described his city as ‘poor but sexy.’ But though poor and bereft of a domestic industry, the German capital city nevertheless has 2,500 start-up businesses — a pool that the mayor sees will bring the jobs the city needs.

The mayor currently puts his hopes on these mini-companies to drive the city’s economy, replenish its coffers and ‘bring jobs to the city.’ According to consultancy firm McKinsey, start-ups can generate 100,000 jobs by 2020. Presently, Berlin has the highest unemployment rate in the country where one in 10 people are without a job.

Kiwi, a start-up that makes remote-controlled access badges, is one example of a business that has helped curb unemployment. The business was launched in 2012 with just four people. Now, Kiwi employs 13 people.

Kiwi founder Claudia Nagel said ‘Berlin has many advantages. Above all, it draws lots of young international talent.’ The high concentration of start-ups also means that talent is ripe in the area. Other conveniences that make the city more advantageous for start-ups are its geographical location, space, and relative cost of living. Social events app Vamos owner Luis-Daniel Alegria said start-up entrepreneurs will find their funds ‘will last twice as long in Berlin as in London.’ Alegria also plans to hire ‘three or four’ more people soon.

Mayor Wowereit hopes that big companies on the lookout for innovative ideas will tap on Berlin’s pool of young talents. Microsoft, Deutsche Telekom, Axel Springer and Otto are just some companies that are already dipping their hands on the pool.

Marc Samwer, co-owner of internet incubator Rocket Internet, said ‘In these crisis times, start-ups and entrepreneurship are the only option.’

However, despite the growing interest in start-ups, entrepreneurs continue to be challenged by funding. Administrative problems are also a problem with non-German speaking entrepreneurs. Wooga games developer Jens Begemann said finding follow-up investors to support the growth phase is the most difficult part of funding start-ups.

McKinsey ranks Berlin as the 15th worldwide in terms of business innovation. To support the growing start-up industry, the outgoing government has called for the creation of a stock exchange for the mini-companies. However, concrete action on the calls still depends on the negotiations between the Social Democrats and conservatives in the coalition government.

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