A young and energetic environment of men and women alike is brewing in Berlin, garnering international attention and exciting many an entrepreneur looking for the next big locational boom. Berlin has begun to pull innovators from across Germany to begin to congregate in an area becoming more and more friendly toward start-ups. Add to this its proximity to more of Europe as opposed to hubs like London and a winning combination is evident.
Berlin is in the middle of a major reincarnation which has many benefits for the exploring entrepreneur. Alongside an atmosphere bristling with between 100 and 400 startups is the benefit of a sprawling city with low rent and plenty of internet cafes. Solid products and knowledgeable entrepreneurial leaders draw a unique blend of tech minded and creative minded people exploring a diverse range of industries. You have likely seen the product of one such start-up, Soundcloud, the popular online music creating application that has exploded in popularity particularly with its sharing capabilities in the Facebook community.
Hackfwd an accelerator with past successful events in Berlin, has been involved in the Berlin area hoping to use their experience to help those with exceptional ideas to see their startups through to creation. Growth of this type is essential in the early years to start-up such as Gidsy, an activity organization website that connects people with local tours and events. The only thing seeming to stand in the cities way is it’s continued struggle to gain prominence in Europe. Without wider recognition and more importantly, money, Berlin will likely remain a strong presence but not quite a contender in the startup scene.
International tech start-ups have long gravitated to Silicon Valley to seek the funding and support network they need to achieve their entrepreneurial vision. Consumed with the desire to follow in the footsteps of Valley-born tech titans like Apple and Google, these young companies often overlook the numerous advantages afforded via New York City’s flourishing tech funding ecosystem. In this article we’ll explore five important considerations for international tech start-ups choosing between Silicon Valley and NYC as their entry point into the U.S. tech funding community.
1. NY has more sources of funding than ever before - While the NY venture scene is booming with new VCs getting into the game and others expanding operations to the Big Apple, entrepreneurs can look for funding from many different sources today. From angel networks like New York Angels and Golden Seeds to angel funds like Arc Angel Fund and Centripetal Capital to family offices and even hedge funds, more and more players are putting their skin in the game. After the 2008 economic crash, it’s also much ‘cooler’ to be working in venture capital than on Wall Street. That’s great news for entrepreneurs, no matter where they come from.
2. NY VCs are looking for more global opportunities - Yes, there is plenty of deal flow to great startups in New York as well as in the Valley. With the most innovative companies coming out of these two ecosystems, many argue that there is no need to look for overseas opportunities. Yet for the most part great local startups come at a high price, which is not always justifiable. What makes a startup from NY so much more expensive for an investor than a similar one coming out of Tel-Aviv, Ontario, Berlin or London? With tech talent being cheaper and very reliable overseas, many VCs are open to examining investments in overseas startups led by exceptional entrepreneurs looking to expand their operations to the US. Notable VCs with a variety of investments in overseas startups are ff Venture Capital, Rho Ventures, RTP Ventures and Bessemer Venture Partners.
3. It’s all about the ecosystem - This is what makes Silicon Valley so unique. A thriving ecosystem that gives back to its entrepreneurs, for the creation of more successful entrepreneurs, startups and prosperity. In that respect, New York City has learned from the best. Co-sharing work spaces like General Assembly (GA), WeWork and others take networking to a whole new level and help entrepreneurs from around the world accelerate their integration into the NY startup community. Pitch events are well attended by entrepreneurs and investors looking to connect. Some overseas accelerators have gone so far as to hold their demo days in New York, bringing their entrepreneurs for a round in the city. Can it get better than this for international entrepreneurs looking for a new home base?
4. Time zone matters – Real-time communication between all parts of a startup - from development and product management to business development and sales - is key to the success of every startup, and is critical for global startups looking for funding. As such, time zone differences naturally work to our disadvantage, yet this basic practical consideration is frequently overlooked. New York is 7 hours away from Tel-Aviv, 5 hours from London, Paris and Berlin, and shares the same time zone as Ontario. While Silicon Valley’s time zone poses major communication challenges to international startups with a base in the Valley, New York enables everyone to stay connected and on the same page with fewer and less protracted lapses in communication.
5. I wanna wake up in a city that doesn’t sleep - We all know entrepreneurship means a lot of hard work, long hours, stress and all the other “fun” aspects that come with building a startup. This is a subjective measure of course, but what’s better than going out for a drink with a fellow entrepreneur to exchange ideas about innovation in the Big Apple, checking out the revived rivalry between the NY Knicks and the Brooklyn (formerly New Jersey) Nets or just walking around Manhattan? Many entrepreneurs who have moved with their families to NY have observed that they can better focus on building their companies when their families are excited about their new life in the city. Frank Sinatra knew all along he wanted to wake up in a city that doesn’t sleep. Now many local and global entrepreneurs know as well. NY is not only a city that doesn’t sleep, but one that constantly innovates.
Latin America is on the rise and if we needed a stamp of approval Brazil is delivering on it. Sequoia Capital , the VC giant, is seriously considering opening an office in Brazil. Vinod Sreeharsha of the New York Times reports that according to several inside sources David Velez, a major partner will be making the move to São Paulo while official comments have yet to be made.
Brazil is leading a list of growing technology hubs and international startup locations of late and a move to Brazil of such a successful VC firm could help strengthen even more the Brazilian ecosystem on both talent and venture. As we know from the example of Israel that has some of the top US venture capital funds based in Tel-Aviv, being close to the startup community means producing better global companies and being a catalyst for innovation. Sequoia has already invested in Scanntech and Despegar in South America and both investments have plans for expansion into the growing Brazilian market.
Skeptics question Sequoia’s experience in the area but with the help of local experts and a history of exceptional achievement we look forward to seeing what can happen and intend to keep a spotlight focused on Brazil!
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