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Firms fleeing Brexit getting tangled up in Berlin's red tape

By Reuters in Berlin | China Daily | Updated: 2016-10-21 08:06

London-based startups claim regulatory hurdles and office space issues are hampering business

Despite a slick campaign to lure companies from London to Berlin after Britain voted to leave the European Union, some of those which have moved say it is not as easy as it first appeared.

Following the unexpected referendum decision in June, Germany's liberal Free Democrats hired a truck to drive around London with a billboard declaring, 'Dear start-ups, Keep calm and move to Berlin'.

An ironic reference to a popular poster entreating Britons to Keep Calm and Carry On at the outbreak of World War Two against then Nazi-ruled Germany, it was soon followed by the opening of an official Berlin marketing office in London.

Two London-based firms are among those who have taken the plunge. Their experience highlights the attractions of the German capital but also the bureaucracy that lurks behind the marketing, a factor in the global tussle for business unleashed by the Brexit vote.

Web-design company MBJ London and real-estate investment platform Brickvest, both co-run by Germans, had already planned to open offices in Berlin but were jolted into speeding up their investments by Britain's June 23 decision.

The motivation: to limit their London exposure in case of a "hard Brexit" - where Britain loses access to the single market.

The two firms cite access to talent and the low cost of living among Berlin's benefits, as well as a hotline to help start-ups get employee visas.

But they urged the city to lower language and regulatory hurdles and offer more flexible office space.

"If it wants to become the leader in fintech (financial technology) then these are the steps it needs to take, otherwise it will get a few companies but it will not become the hub," said Brickvest co-founder Thomas Schneider.

Brickvest is building an office in Berlin and plans to grow its staff from five to 15 people over the next six months.

But Schneider said the German financial regulator BaFin was too conservative and the fact that all documents must be translated into German to apply for a banking license was off-putting for companies like his, which employs 10 nationalities.

MBJ, meanwhile, plans to build up its operational team in Berlin and more than double its headcount to around 40 or 50 by the end of 2017.

But it took the company around two months to set up here compared with some three days in London, said MBJ's Chief Operating Officer Toni Horn.

However, it is not just foreign startups who find things hard. A German Startup Monitor survey published on Tuesday found that only 5.5 percent of founders surveyed gave the government a "good" or "very good" score when it came to understanding startups.

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