Berlin is not the German state with the strongest economical power in the country: it may rank in GDP beyond Köln, Munchen, Stuttgart, Hamburg, Frankfurt, and Mainz corresponding states. But everyone who visits Berlin can feel the cultural atmosphere and the creative spirit, which feed the German capital with an unrivaled soft power of innovation.
I had the chance to explore three Berliner innovation hot spots that reflect this state of mind.
1. Hub:raum international
Axel Menneking is responsible for the international Program Management of Hub:raum, the international incubator of Deutsche Telekom. He presented to the Hub:raum with great enthusiasm and expertise, and I was impressed by the work achieved in this short period of time.
Hub:raum derives from the challenging innovation context in the digital industry: tech start-ups benefit from open source, cloud, developers, they start first and fast; new OTT competitors, like Whatsapp, emerge at rapid pace. Deutsche Telekom is the leading European Telco provider, with integrated IP networks, best customer experience, a desire to win with partners, and a will to lead in business. Unfortunately, no one from the Telcos has yet found the magic formula to build from the inside something like a Facebook or an Ebay.
As a response to this need for speed and creativity, Hub:raum was established, focusing at seed & early stage funding, and developing smart partnering: mentoring, office hosting, access to DT assets and financing (DT fast funding up to k€ 300, and preparing the next round with VCs). Process starts with acceleration period, 3 to 6 months before investment: no money involved, no strings attached, the aim is to build a product to show, and to introduce start-ups to the organization.
Hub:raum scouts the market in consistency with DT innovation priorities (Cloud, IoT, TV, Security, Telecom Network, … no social media, e-commerce or gaming). Hub raum is part of DT Product and Innovation division.
Hub:raum premises are simple but reflect great modernity: flexible meeting rooms, basic garage working floors, videoconference, open space for conference (available even for non Hub:raum residents), and kitchen for team breakfast! I particularly liked the idea that start-ups drag furnitures from the warehouse, and drop it onto their plan. Hub:raum is located near a DT Lab, which designs products like Mozilla phones.
Hub:raum was set-up as a separate brand, heading to external networks, and deeply tied to innovation ecosystem. It is located in Berlin for Western Europe (10 people + 65 start-up staff), Krakow (5), and Tel Aviv (1). It has already received over 3000 applications, accelerated 37 start-ups, completed 10 investments, and was granted with Best Accelerator award. Application process is designed to run fast, with the objective of 8 weeks timeline: 4 weeks from application to investment decision, 4 weeks for legal.
Top learnings that Axel liked to share are:
- A clear incubation vision: geographical scope, innovation, not money first;
- Top management support & internal alliance: connecting to DT business is the holy grail, but search for specific companies to complement their portfolio, can be performed as a service to DT BUs; a separate team channels the demands to the business managers, who look for start-ups: when they find a fit, they facilitate the discussion with the BUs;
- A start-up hub organization, mixing corporate and investor competencies, and with coworking and event spaces;
- A network with all parties of the ecosystem: reputation in the market (don’t sell lies, like connecting to all DT customers), success stories with famous mentors;
- Value and differentiation in completing projects with business owners, going for quality, and investing in a selection of start-ups, not entering too quickly.
The vision is to build a portfolio whose value over time (5 to 7 years) pays for the organization Opex, to inject innovation into DT organization, help the brand with a renewed flavour, and attract talents.
Even if multiple of ten millions would be a very good outcome, it is still very small at DT scale: therefore the innovation sourcing is most important, additionally Hub:raum acts more as a tool to transform the organization, a change management tool. Telcos are in the process of redefining themselves as platforms, like Amazon, Facebook, Apple, Google and their apps store. Collaborating with start-ups is a way to build that, just like the opening of APIs.