This note examines the current state of private equity and venture capital activity and investment in Germany, and specifically in Berlin, in relation to the state of such activity and investment that existed in the San Francisco Bay Area prior to and following its tech explosion in the late twentieth century. Numerous factors such as political and ethnic diversity, a comparatively lower cost of living, and proximity to higher education institutes are propelling Berlin’s startup and tech scenes, and are eerily reminiscent of similar factors that fueled the Bay Area’s growth and attracted private equity and venture capital activity to that region.
With a tumultuous history stretching back at least a century to the early 1900s involving numerous wars and political, physical, and national divisions, Berlin has lacked resources and lagged behind in terms of investment and activity compared to its European neighbors. However, almost thirty years after the fall of the Berlin Wall and the end of the Cold War, the startup and tech scenes in the Hauptstadt are finding their footing and thriving, and seed funding and other forms of investment are beginning to flow in as a result. Factors that significantly contributed to the Bay Area’s tech blow-up and reputation as a tech Mecca, are now similarly positioning Berlin to become the next capital of venture capital and private equity in Europe.