Reversal after the Corona dent: More Germans are starting up again

For years, fewer and fewer people in Germany have dared to take the step into self-employment.

Reversal after the Corona dent: More Germans are starting up again

For years, fewer and fewer people in Germany have dared to take the step into self-employment. In the past year, this trend has reversed. According to a study by KfW, this has a lot to do with the pandemic - digital business ideas in particular have become more popular than ever.

After a clear Corona dent, more people in Germany started their own business again last year. Also because many projects were put on hold in 2020, the number of start-ups with catch-up effects rose again by 70,000 (13 percent) to 607,000, as reported by the state-owned KfW banking group in Frankfurt. At 42 percent, the proportion of women was higher than ever according to the KfW start-up monitor. A particularly large number of young people were willing to start a business at their own risk. The average age of founders fell to 35 years.

During the pandemic, digital business ideas also prevailed more than ever before: 41 percent of the start-ups were Internet-based and 31 percent of the founders expected their customers to use digital technologies. 85 percent of new companies were founded. KfW chief economist Fritzi Köhler-Geib called the developments "encouraging". However, you are moving at a very low level, which is far from the highs at the beginning of the 2000s.

In 2003 there were almost 1.5 million start-ups. In addition to the strong job offer, the demographic development plays the main role in the lack of entrepreneurial spirit. "We are an aging society and with increasing age the desire for professional independence decreases," explained Köhler-Geib. A brisk start-up activity is actually desirable from an economic point of view because it stimulates competition.

The founders of the year 2021 also had good reasons for their step: According to the KfW Monitor, 82 percent thought they had identified a good business opportunity (2020: 80 percent). Such "opportunity start-ups" are on average more stable and create more new jobs, as the authors explained. Only 15 percent founded a company because they couldn't see a better alternative for themselves.

Based on previous experience, around 30 percent of all founders have given up after three years, and 40 percent after five years. According to the KfW surveys, personal reasons most frequently played the decisive role. The biggest barriers to starting a business are therefore financial risks and financing difficulties, as well as not having the benefits of employment.

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