I just returned from London and couldn't be any more convinced of the fact that VC's need to get to Berlin. I've talked to a bunch of the top players in the industry and was curious to see who was going to go to Berlin. By "go to Berlin" I mean truly put someone on the ground working from there and "commit". Earlybird seems to have committed fully to the move. From some of their posts via Facebook you can tell they are almost fully comitting to the city. Yet I still wonder why more firms haven't done this?
If you listen to VC's talk, they always say they want to be close to their start-ups. In the Valley, they want to be able to ride their bike to those offices (yet they always drive but you get the point!) This is the benefit of the Valley. Everyone is close by and they have created their own ecosystem around Palo Alto. In Europe, you have historically London in the top spot and Paris, Hamburg, Munich, Zurich and so forth all tried to be hubs. Technically though the only one close to London at this point is Berlin and I believe it may even be poised to surpass London. Yet, to-date it seems only Earlybird has decided to pick up and move. I'm sure they'll keep their Munich and Hamburg offices for a while but if their next fund happens, they'll be doing most things from Berlin. At the same time, Index, Accel, Balderton, Union Square Ventures and all the other top tier funds haven't firmly put someone on the ground (yet). They "parachute" in fairly regularly but people aren't there, deeply entrenched in the scene. This is a huge opportunity being missed. VC's need to pay it forward first.
You can't just drop in now and again. Not only does it benefit your own fund to be there. I believe top tier funds would benefit the local scene if they were entrenched. It's not a one-sided relationship. Not only do the entrepreneurs have to do the work to innovate and start great businesses. The VC's have to cultivate the ecosystem too. Yes, there are already local players on the ground including angels and VC's as well as incubators but the big guys are still missing, be it from London or the US. If you're going to take risks and avoid moving with the herd, you can now still lead it to Berlin. Come it will! Earlybird is super smart to relocate their team to Berlin. It allows them to do two things. They will consolidate their team in one location and they will all have their ears on the ground in the most thriving hub in Europe alongside London. Berlin is there for the taking which London isn't. I applaud whoever else steps up and recognizes this opportunity. It won't last long until the herd is formed.
Update: so a few people have commented that Berlin needs more angels and not top tier VC's. Well, to that I have to say I disagree. That's putting the horse before the cart. An ecosystem produces angels and not vice verse. Top tier VC's attract entrepreneurs. Entrepreneurs get funded (by some angels locally or from afar and then VC's and the best of the best need big bucks to get to big exits). Entrepreners sell company and become wealthy. Then the entrepreneur who now has both experience AND capital becomes an angel.
If you seriously think you can attract angels to a city, then you've sorely misunderstood angels. Funds can move. Angels don't (most of the time and definitely not the Germans). After building their company somewhere, they are most likely to stay and continue investing where they built their company (or completely bail out and move to Switzerland). The city they built their company is where their network is based. It's where they know the lay of the land. You're going to have a hard time convincing a Ron Conway or Dave McClure to move to Berlin. Even getting a Stefan Glänzer, Niklas Zensström or Sherry Coutu most like ain't going to happen. Add in family committments that most angels have and you can see how a mole hill has become a mountain of a problem. On the other hand, get two or three top tier VC's into a region and watch it grow.