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Berlin v. San Francisco: Which is better for startups?

There's already quite a bit of an exchange between Silicon Valley and Berlin's so-called Silicon Allee, but which city is truly better for the startup scene? Graphic design marketplace 99designs shares with The Local how the two compare.

Published: 10 August 2017 17:14 CEST
Berlin v. San Francisco: Which is better for startups?
Berlin: Thomas Wolf/Wikimedia. San Francisco: kropic/Depositphotos

Berlin is already gunning to become Europe’s startup hub in the wake of Brexit, with hopes that London will become less relevant.

SEE ALSO: London v. Berlin: Which is truly Europe's startup hub?

But will Berlin ever be able to compete in the same league as the San Francisco Bay Area’s tech scene?

Online design marketplace 99designs did some research on the subject to compare the two cities side-by-side. Here’s a look at how they match up.

Starting a startup

According to 99designs’ findings, Berlin seems to have slightly better benefits for entrepreneurs. It takes less than seven days to launch a business at the cost of €700, compared to San Francisco’s seven- to ten-day time frame at the cost of €788.

Source: 99designs
 
As far as taxes go, Berlin's rates are higher with sales tax at 19 percent compared to San Francisco's 10 percent, and the corporate income tax rate in Berlin at 15 percent versus San Francisco's 9 percent.
 
Living and working
 
But while Berlin's taxes might be higher, its cost of living is certainly much lower. Internet services are €23 monthly in the German capital, compared to twice that at €47 in San Francisco. Berlin's far superior public transport – which this San Franciscan turned Berliner can attest to – is also much more affordable, at roughly €63 per month compared to €79.
 
Going out and enjoying life outside of work is also much less expensive in Berlin – just €3.20 for a beer at a bar beats San Francisco's €5.40, while the money you'll save on a €2.50 cappuccino compared to a €3.90 in California could almost buy you a second one. Lunch in Berlin might set you back €8, but that's much less than San Francisco's €13.50 meal.
 
And we haven't even gotten to rent yet. You could rent four separate one-bedroom apartments in Berlin's city centre for €749 each per month before you'd reach the €2,936 necessary to afford just one in central San Francisco.
 
Perhaps that's why Mercer rated Berlin much higher in its 2017 quality of life rankings – 13th place for the German capital and 29th place for San Francisco.
 
Still, it's probably a good thing Berlin is so cheap since software engineers there make about half as much as what those in San Francisco do – €49,000 compared to €100,000 per year.
 
Source: 99designs
 
The people
 
The overal demographics of the startups scenes in both places are fairly similar. The average age of founders is 32 in Berlin and 31 in San Francisco. Both cities also have relatively few female entrepreneurs: 13 percent of Berlin founders are women while 16 percent of San Francisco founders are women.
 
They also have fairly similar rates of immigrants becoming business starters, with 43 percent of Berlin's startup launchers being non-German and 46 percent in San Francisco being non-American.
 
But Berlin also has a much more international focus: 42 percent of startup customers there are foreign, versus 30 percent in San Francisco.
 
Source: 99designs
 
99designs is an on-demand design marketplace for freelance designers and businesses of all sizes. To see the full infographic and research by 99designs, check it out here.
For members

WORKING IN GERMANY

Five things to know about salaries in Germany

Finding a job is typically a top priority when planning a move to Germany. The country boasts the third largest economy in the world and a continuing need for skilled professionals. 

Published: 2 May 2024 12:26 CEST
Five things to know about salaries in Germany

If you are moving to Germany, you might soon start looking for a job in the country. However, like many other aspects of living abroad, there are several cultural differences and specificities when it comes to job hunting in Germany – especially when it comes to salaries.

Here are five things to know about salaries in Germany.

There is a minimum wage in Germany

Germany’s minimum wage of €12.41 per hour, pre-tax came into effect at the start of this year. This amounts to a monthly salary of €2,054 which ranks ninth in the world. The minimum wage will rise again in 2025 to €12.82 per hour before tax deductions.

There have been calls recently to hike the salary up higher to €14 per hour.

READ ALSO: Millions of workers in Germany ‘earning less than €14 per hour’

Find out salary expectations

Germany does not require companies to list salary ranges for listed positions. But that may be changing soon. The EU parliament passed a wage transparency law to require companies to publish annual reports detailing wage and wage discrepancy information. The rules, which are set to go into effect in 2027, are intended to help close the gender pay gap. 

In the meantime, employees can utilise online resources to find industry averages and expectations for different roles:

  • Gehalt.de offers users access to salary information on more than 800 professions
  • Online platform, Kununu provides compensation information and employer reviews to users in the DACH region  
  • Berlin residents can utilise REDSOFA’s salary survey for an overview of salary averages in the country’s capital city

As of April 2023 the average gross monthly salary was €4,323 according to Germany’s Federal Statistical Office.

Two-thirds of full time workers make less than this average monthly salary and one-third of workers earn more than this average monthly salary.

While wages after deductions may be less than similar roles in other countries, it is also important to take into consideration what other benefits come with a salary. Paid holiday leave, pension contributions, long notice periods and annual bonuses can help make up some of that difference. 

READ ALSO: How much do employees in Germany typically earn?

Check your payment schedule

Internationals can usually expect their salary once a month when working in Germany. Many German companies choose to pay employees either on the 1st or 15th of the month. It is also important to note that most employees can expect to receive their first pay check within 30 or 45 days of starting. 

For positions that offer yearly bonuses, these payments are included in a 13th pay check which are subject to income tax.  

A person works on a laptop.

A person works on a laptop. Image by Bartek Zakrzewski from Pixabay

How many hours do you work?

When looking for a job, don’t forget to check how many hours you can expect. Job descriptions will include expectations for time commitments. 

Mini-jobs, as expected from the name, are limited in hours and pay. Employees can expect up to €538 per month. Mini-jobs do not provide social security because they do not require social security contributions. Employees are also not automatically covered by health and nursing care insurance. 

Teilzeit, or part time jobs, are defined as any job where working hours are less than a full time position.

A common misconception is that part-time work requires working 20 hours or less a week. But an employee working five days a week for 30 hours, at a position that is typically 40 hours when full time can also be defined as a part time worker. 

READ ALSO: The rules in Germany around ‘mini’ and ‘midi jobs’

In fact, Germany has a term for workers who work between 28 and 36 hours a week. Vollzeitnahe Teilzeit, or nearly full time part time workers, can be a popular choice for some people, including parents. These positions can give employees more flexibility to balance work and family responsibilities. It is important to note that these workers are paid according to their time worked, so it will still amount to less than full time.

Depending on the work schedule, part time employees can earn the same amount of vacation as their full-time counterparts. That’s because holiday leave is calculated based on days worked, not hours. If a part time worker comes in five days a week, they will be eligible for at least 20 days of holiday. If that same part time worker comes in three days a week, they will be legally entitled to twelve days of vacation, even if they worked the same hours as the other employee. 

In most companies, weekly working hours between 35 and 40 hours are considered full-time employment or Vollzeitbeschäftigung. 

Watch out for the gross v. net difference

Before you sign the dotted line, it will be important to check how much of your gross salary you’ll be able to keep come pay day. Companies that include salary expectations in descriptions include gross salary (Bruttoeinkommen) – not the net income after taxes and deductions (Nettoeinkommen). The amount deducted will depend on how much you earn, the tax class you’re in and on other factors such as how much you’re paying for healthcare but it is usually around 40 percent. 

Salaried employees can find information on the deductions on their pay slip. Some to expect to see include:

  • Taxes are deducted directly from the gross pay. The amount is based on the tax bracket your salary falls within 
  • A percentage of your gross salary is also deducted for your pension / retirement contributions
  • Church taxes between eight and nine percent of your salary will also be due if you are affiliated with a religion
  • Unemployment insurance amounts to a 2.5 percent deduction from your gross salary. It is important to note that the insurance covers a salary up to €90,600 
  • Health insurance contribution rates are typically split between employers and employees. The rate depends on the provider. In 2024, the TK contribution rate to health insurance is 15.8 percent of the gross income

READ ALSO: What you need to know about your payslip in Germany 

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