I don't want to go to Berlin

Berlin is Germany's fintech capital. But some founders deliberately choose not to locate there. Jamal El Mallouki is one of them. Why?

The facts are so overwhelming that you can't really talk about a fight. Berlin will remain the fintech capital of Germany in 2020. Both in terms of the number of start-ups and venture capital spent, Berlin still has a clear lead, that's how the authors of Comdirect's latest fintech study

What was already evident in previous years remains the same in the Corona year 2020, although a "but" has crept in. For the first time, Berlin is smaller than the other three big locations Munich, Frankfurt and Hamburg together. This shows that the lead is shrinking, even if only minimally. Frankfurt, on the other hand, looks a bit out of the way, occupying only 4th place in the Comdirect ranking.

However, Jamal El Mallouki has been proving for some time that it's easy to make it as a fintech in Frankfurt. When asked about the city, he keeps it with the German band Kraftklub, who already sang: "I don't want to go to Berlin". In recent months, El Mallouki's fintech CrowdDesk has been able to grow faster than few others, with the number of employees shooting upwards. On the one hand, this is due to the fact that the start-up changed its business model in 2015, on the other hand, it is just a little bit due to Frankfurt.

Mainz just didn't fit as a city

El Mallouki founded his first start-up while still in Mainz, only to discover that it wouldn't work out the way he had imagined. Over "LeihDeinerStadtGeld.de" he wanted to give out credits of the city to private investors, small interest rate in addition, everything sounded after large potential. But the great success failed to materialize and so the team changed the approach in 2015, today offers a white-label solution for crowdfunding of all kinds.

LeihDeinerStadtGeld became CrowdDesk and it quickly became clear: Mainz, as a city, just doesn't fit. "Personally, I would have liked to stay in Mainz, many friends live there, the family anyway. But the city offered too little." According to him, there was too little support in Mainz, the city was too unattractive for professionals in the financial sector and there was also a lack of venture capitalists, El Mallouki recalls. That was a pity, says the founder with the short curly hair and dark, round glasses. "It was purely a business decision."

El Mallouki was faced with the big question: is it going to Berlin now? But in the end the decision was made against the capital, precisely because CrowdDesk had a lot to do with banks and other financial institutions. Accordingly, the proximity to the large financial institutions is much closer in Frankfurt than in Berlin, for example, says El Mallouki. The environment in which CrowdDesk operates also played a role in the question about employees. "Our topics require finance-savvy, specialized employees, which we would have found more difficult to get in Berlin than in Frankfurt," he says. In the metropolis on the Main, he says, that's not a problem: he had received just under 3,000 applications by last year.

For Fintechs Frankfurt offers some advantages

In addition, in 2015 there were all kinds of opportunities to exchange ideas. "Frankfurt Forward, the business development in Frankfurt or CO Money: these are all reasons why we chose Frankfurt," says El Mallouki.

So is Frankfurt the better Berlin for specialised fintechs? Even El Mallouki doesn't see it quite so rosy. Even when CrowdDesk came to Frankfurt in 2015, there was a lack of venture capital, and the exchange with venture capitalists was much slower than in Berlin. "There you know each other, you see each other, that's much less the case here in Frankfurt," he says. The start-up has suffered from this itself. When El Mallouki and his team were looking for backers, the selection was rather "thin," recalls the CrowdDesk founder.

At least the absolute volume of investments in Frankfurt remains far behind the competition from Berlin in 2020. Flowed to Fintechs in the capital 1.8 billion euros, it was just 42 million euros for the Frankfurt Fintechs.

El Mallouki would therefore like to see much more initiative coming from the city of Frankfurt, more space for start-ups and especially fintechs, and also start-up initiatives being promoted. This would also require more initiatives from the university environment. "The fintech focus is not yet lived enough by the city," he says. So to Berlin after all? "No, I would never swap."