Why are there so many FinTech startups

Berlin - Eldorado for FinTech startups

Frankfurt, Leipzig, Munich: These cities are of decisive importance for Germany's monetary system - but what is the situation in the capital? Our series about important financial hubs presents today: Berlin - the Eldorado of German FinTechs.

Sure, Berlin has been the linchpin of German politics since reunification in 1990. For a long time, however, when it came to the economy, the headlines were mostly negative. Even the former mayor Klaus Wowereit only thought of his city 15 years ago: "Berlin is poor, but sexy."

In the meantime, Berlin is in a much better economic position and is, above all, the capital of the FinTech industry. FinTechs are companies that use modern technologies to offer new financial services. There are now around 700 of them in the republic. According to a comdirect study, there are almost as many FinTech startups in Berlin as there are in the cities in second to fourth place: 228 fintech founders chose Berlin as their location, 84 each opted for Munich and Frankfurt and 67 settled in Hamburg. A third of the FinTech startups based in Berlin deal with real estate. This is followed by startups from the financing sector and the areas of payments (payment methods) and InsurTech (insurance technology).

The start-up scene in Berlin is flourishing

Berlin appeals to the founders primarily because of its proximity to politics, government and industry associations: regulatory framework conditions are of central importance for startups when it comes to entrepreneurial success. So it's no wonder that the idea providers want to be as close as possible to what is happening and, if necessary, influence it.

Berlin also impresses with its office rents, which are still moderate compared to Germany, and its economic opportunities: Berlin startups generate the most venture capital (i.e. risk investments in a business idea). This is one of the reasons why a good 60 new startups were founded here in 2016 alone - almost as many within one year as there are in Hamburg overall.

With 664 million euros, the startups in the capital receive more than one and a half times the venture capital that all other German locations combined. For comparison: The Hamburg FinTech founders received 213 million euros in the same period, the Munich 159 million and the Frankfurt only 25 million euros.

Cheers to the Berlin cultural scene

Berlin is not only so attractive because of the large number of investors and its proximity to politics. The founders are also drawn to this city because of the lively cultural scene. Creativity and innovation can still be felt on almost every corner in Berlin. Ex-Mayor Wowereit has therefore aptly titled his new book: "Sexy, but not so poor anymore".

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