Only idiots don't start businesses in Berlin?

Last Saturday, the Tages-Anzeiger published a double page about startups in the economics department. The main article of Barnaby Skinner was titled “Only the chaff doesn’t go to the Spree” (online now as “what causes Swiss young companies to fail”).

The Tagi takes up a topic that has been bothering me for a long time and that I always address in my presentations: In which city should you found a startup?

I don't think there is a general answer to this - but by asking a few specific questions you can identify the best location for your startup.

In which city has an ecosystem developed that my startup fits into?

Especially in the early stages of a startup, it is extremely important to be able to exchange ideas with other founders in order to challenge your own idea, verify assumptions, identify possible stumbling blocks or find suitable co-founders. Right from the start, every founder should establish initial contacts with investors in order to be able to rely on a network for financing rounds. A startup event takes place somewhere in Berlin every evening, and top-class conferences regularly take place in the city. And Zurich? We travel there once a year CEO Day to Berne.

Rankings can provide an indication of a good startup ecosystem, such as that of Compass (The study can be ordered by email, a summary is included, for example TNW - no, Zurich doesn't even appear). You should also analyze in which city startups in a similar industry have already settled, because this is an indication of suitable investors, industry meetings and networking events, and, last but not least, a market. Berlin could be the right location for eCommerce, perhaps London for a fintech startup.

Where can I find suitable employees for my startup?

Six years ago, on the subway in Berlin on a Saturday afternoon, I overheard a conversation between two students who were talking about which startup they would like to do an internship at. This is still unimaginable for Zurich today; startups are simply not cool here.

The most talented programmers from all over Europe who want to work at a startup are drawn to Berlin because of the pull of the vibrant Berlin scene. For many techies, Berlin represents the most exciting challenges among the most attractive young companies. However, developers come to Zurich for whom other factors are more important: above-average pay, a secure job, fringe benefits - things that a startup cannot offer.

Where are the costs of living startup compatible?

Anyone who has ever been to Zurich knows: the cost of living here is definitely far too high to be compatible with a small startup budget. Worse still: What is celebrated as Series A in this country (among web startups) passes for a larger seed round in other cities. In another city - assuming the right business model and good usage figures - more money can be raised and the cash burn rate kept lower. It is important to exploit this competitive advantage.

And where is the quality of life?

Of course, the quality of life in Zurich is infinitely great: where else can you swim in the lake in the middle of the city, are the streets so clean and the stability so great?

Of course, it's easiest not to leave your comfort zone at all. It's certainly not easy to quickly settle in in another city and find new friends and acquaintances. But perhaps it is precisely this forced focus on the startup that will enable it to get off to a flying start? You can also live quite well in other cities - be it Berlin, London, Paris or San Francisco.

Is there self-selection?

The Tagi writes it clearly: The really big ideas (and therefore the good entrepreneurs) move abroad, preferably to Berlin. The smarter one gives in, the donkey stays put or fights against windmills.

One possibility would of course be to get involved in the local startup scene. However, I wonder how much energy is lost by investing in an underdeveloped ecosystem that could be used for the company. Aren't the clever founders more likely to relocate to a location where the conditions are as favorable as possible, while others waste resources unnecessarily?

What's interesting is the middle ground the startups choose Snap and Amorana have decided: Knip has offices in Zurich, Berlin and Belgrade, Amorana is currently looking for a suitable office in the German capital. Could multiple locations be the solution for Swiss founders? The development in Eastern Europe, marketing in Berlin, and the headquarters in Zurich, not least for tax reasons? I imagine commuting between different offices to be very exciting and educational, but also time- and cost-intensive. That's why I'm going to examine this model very carefully for my next startup.

Now I'm looking forward to your opinion - here in the blog, on Facebook or on Twitter. Can Zurich hold its own alongside the European startup hubs Berlin, London and Paris? Is the Swiss startup scene more developed than you think? Will you set up a business in Zurich or abroad?