Berlin’s Growing Appetite for Risk: Jon Soberg Q&A

By David Knight |

Jon Soberg is a Senior Vice President at Blumberg Capital in the US, the investment vehicle of David J. Blumberg. He is currently visiting Berlin and sat down with Silicon Allee on Saturday at the plush Potsdamer Platz offices of law firm Raue LLP to talk tech.

SILICON ALLEE: This is already your second trip to Berlin in 2012 – how many investments do you have here?

JON SOBERG: We have a term sheet out that we hope to maybe close in the next couple of weeks, and at that point we would have four companies in Europe, two based in Berlin. I’ve actually been meeting companies this weekend so you never know, it’s possible there could be more. We have appetite for great companies – if we find them here in Berlin we’re happy to make those investments.

SA: The current Berlin investment in your portfolio is Madvertise. How is it doing?

JS: We’re very happy with it; we’re excited about the prospects and we think that they’re doing well.

We invested last summer but we’ve known them for a while so we got to know their team over time. When it was time to raise, we were able to close that deal.

SA: What do you think of the startup scene here in Berlin?

JS: It’s very exciting. We’re seeing great entrepreneurs, we’re seeing people who execute phenomenally well, we’re seeing some good innovation across all kinds of different categories. When I look at the global landscape, Silicon Valley is Silicon Valley, it’s hard to match that, but outside of that, New York is exciting, Tel Aviv is exciting, and Berlin is in that conversation now.

We’re seeing a lot of people gravitate towards Berlin; it’s not that expensive, there’s great talent here, phenomenally educated people, and I think there is a growing risk appetite – people are looking to start companies and are taking risks, and we’re seeing great things happening.

SA: How does it compare to London or Paris?

JS: There is still a lot of activity in London; I’d say a little less in Paris. We’re seeing people move into Berlin. Part of it is that you develop an ecosystem; Silicon Valley is the same way in the United States. Companies will get to a certain point and then they’ll say, ‘we need to have someone in Silicon Valley.’ And why is that? Is it because the company has to be there? Not necessarily, but you can get leverage from being part of an ecosystem with other people taking risks like you, and from the capital and from the whole environment, and we’re seeing that develop here as well.

SA: What’s been the main reason for Berlin’s emergence as a tech hub?

JS: Part of it which you’re seeing it in Berlin now, and which is part of why Silicon Valley is so interested, is the fact that you’ve got people with experience. Anyone can start companies, but scaling it from being really small to being a Google or a Facebook is another matter. There is a lot of history of that happening in Silicon Valley. Once you get a few here that have done that as well, you get that DNA of those people that have scaled companies, that have built companies from the ground up, and that can be infectious. You don’t find that everywhere; you can’t go just anywhere in the US and find people that have scaled companies the way Google has scaled, for example. You can’t find very many places like that in the world.

But there are some phenomenal companies that have been built out of Berlin, and I agree completely: once you’ve got a critical mass it’s hard to stop. The inertia keeps going.

SA: So having expertise is vital to an ecosystem?

JS: I think so. I think there is an infectious part to it as well. Once people see success stories, it’s more likely that others will emulate them. Plus I see the same things happening in Berlin that happened in Silicon Valley. The success stories in Silicon Valley are all very approachable. It’s not that hard to reach them and they’re willing to give from their experience, and there is the same situation here where people are willing to share and help other people build. That is something which is really, really important.

SA: It sounds like the outlook for Berlin is bright…

JS: We’ve seen people spin off and start other things, incubate, and there are groups like Team Europe which are building teams and companies and I think there is some real execution excellence at work here, which is also starting to drive companies.

SA: Do you listen to a lot of pitches from startups?

JS: We’re always hoping to talk to as many people as we can and to learn as much as we can, and hopefully we can help a little bit. We do a certain number of investments but part of what we feel we can do as VCs is to help. We see so many things; sometimes we can give people a couple of nuggets of advice or you can introduce them to somebody quickly that can really help make their business and we do that very frequently.

SA: Are you on the lookout for potential investments?

JS: You always have to keep your eyes open. The odds are small – last year I think we saw 3,000 companies and we invested in 16, and that was the highest number ever for us. So the odds are low but we believe in giving back to the ecosystem just like I’ve been talking other people doing, so if there’s anything we can do…