What is it like to work as an Analyst in Berlin?

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Florian Hansmann's picture

Berlin does not come to one’s mind as an attractive location when considering a career in finance. Therefore, one might argue that going to Berlin for a 3-month internship at a corporate finance advisory may not be the most reasonable thing to do. Nevertheless, I did exactly that. Now, five months down the road, I am still in Berlin and not planning on leaving anytime soon.

Four days ago, I moved to Berlin-Mitte, the most central district of Berlin where streets are filled with trendy bars and restaurants and where people look at you in weird ways when ordering coffee in German. In other central districts it is no different and I think it is this vibrant and international environment that made me want to stay long-term. But Berlin has got a lot more to offer. The cool image and open attitude that Berlin exhibits as well as the modern infrastructure and affordable rents (e.g. rental costs are almost 70% lower than in London[1]) make Berlin an attractive destination.

The city has also been attracting a growing number of innovative and talented entrepreneurs, and international investors today are staying in Berlin for longer periods than they used to. Some investors have even moved their offices to Berlin. Figures by VentureSource show that Berlin startups raised about $2.2bn in venture capital compared to $1.5bn raised by London startups last year[2]. This comparison is even more impressive when considering the fact that Berlin’s tech ecosystem is smaller in absolute terms than its counterpart in London. These figures also hint at the progress that has taken place resulting in the startup community becoming more structured and mature. People still enjoy themselves setting up startup companies, however, things have become more serious as capital inflows increased and competition intensified. Nevertheless, young companies remain a vital part of Berlin’s identity and are as ubiquitous as beer and graffiti. According to Gruenden.de, a consultancy for new companies, a new startup is founded in the city every 20 minutes [3]. The rate of failure is naturally high but companies such as Delivery Hero, 6 Wunderkinder, Applift, EyeEm, Zalando and Soundcloud stand for the recent successes of Berlin’s startup scene.

When taking the city’s setting and environment into account, does my career in Berlin comply with generally accepted ideas of an old-fashioned career in finance? After only four months, I think I am yet unable to provide a comprehensive answer to this question. What is apparent, however, is that Berlin has become an attractive location for the tech and Internet sectors, and I greatly enjoy working on M&A and financing transactions in these sectors. In fact, I would even say I have developed a passion for analysing business models of firms in these ‘new economy’ sectors. At the moment, I am particularly fascinated by the current development of private market valuations. For instance, how can a company without any hotel buildings on its balance sheet reach a valuation three times as high as the current market capitalisation of Hyatt Hotels[4] [5]? Similarly, how can a company that still only provides taxi rides, with cars that it does not own, be on its potential glide path to a $100 billion IPO[6] (a figure close to the estimated value of the entire global taxi industry[7])? There is much dispute about whether the staggering valuations of companies like Airbnb and Uber are reasonable figures or simply inflated ‘marketing numbers’. However, most people would agree that valuation setting in private markets is a challenging process after all. Based on my experience, I can only agree with this view, but I also think that this circumstance makes my work as an analyst exciting at the same time.

 


[1] The Guardian, 2015: Creative young Brits are quitting London for affordable Berlin; Available at: http://www.theguardian.com/world/2015/aug/01/creative-young-brits-quit-london-affordable-berlin
[2] Die Welt: Warum London das angesagte Berlin fürchten muss; Available at: http://www.welt.de/wirtschaft/webwelt/article143892648/Warum-London-das-angesagte-Berlin-fuerchten-muss.html
[3] TalkBusiness, 2015: One born every 20 minutes – Berlin is the city of startups; Available at: http://talkbusinessmagazine.co.uk/2015/07/21/one-born-every-20-minutes-berlin-is-the-city-of-startups/
[4] Yahoo Finance, 2015: Hyatt Hotels Corporation; Available at: http://finance.yahoo.com/q?s=H (06/11/2015)
[5] CNN Money, 2015: 'Crazy money' - Airbnb valued at over $25 billion; Available at: http://money.cnn.com/2015/06/27/technology/airbnb-funding-valuation-update/?iid=EL
[6] Yahoo Finance, 2014:Uber investors see IPO that would top $100 billion; Available at: http://finance.yahoo.com/news/uber-investors-see-ipo-top-192343270.html
[7] Vox Media, 2015: Why Uber could be worth $70 billion; Available at: http://www.vox.com/2014/12/4/7336433/uber-worth-