Young women are driving the startup scene. However, there is also a high percentage of founders who abandon their businesses after a short period of time. (Photo: © auremar/123RF.com)
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June 1, 2022
After the coronavirus slump, start-up activity has returned to pre-crisis levels. 607.000 Germans started their own businesses in 2021, according to the new KfW Start-up Monitor. It's striking that more and more young women are starting businesses.
Business start-up activity in Germany has recovered to pre-pandemic levels after the COVID-19 slump. 607.000 women and men became self-employed in 2021, an increase of 70.000, or 13 percent, compared to 2020. This is according to the new KfW Start-up Monitor . Many of the 2021 start-ups had been planned earlier but were put on hold due to the lockdown.
"The recovery is very encouraging, and the fact that new businesses are now younger, more female, and more digitally driven is also a positive development. However, due to the long-term downward trend, we are still at a very low level . It is far from its peak at the beginning of the 2000s," says Dr. Fritzi Köhler-Geib , Chief Economist at KfW.
Besides the long-lasting boom in the labor market with attractive job alternatives, demographic development plays the main role here: "We are an aging society , and with increasing age, the desire for professional independence decreases." However, a lively start-up activity is desirable from an economic perspective.
Because: "Start-ups stimulate competition and are of particular importance for the future viability of the economy . They force established companies to constantly put themselves to the test and get the best out of themselves," says Köhler-Geib.
The promotion of start-ups and the reduction of barriers to starting a business must therefore continue to be a high priority in economic policy, emphasizes the chief economist of KfW.
The number of female entrepreneurs rose particularly sharply in 2021. 257.000 women started their own businesses (an increase of 52.000, or 25 percent). The number of male entrepreneurs increased to 350.000 (an increase of 18.000, or five percent). According to KfW, the proportion of female entrepreneurs thus rose to 42 percent (2020: 38 percent).
Younger women, in particular, contributed to this increase. The proportion of women under 30 among female entrepreneurs rose from 28 to 37 percent year-on-year. The proportion of male entrepreneurs under 30 also reached 37 percent recently – although the increase was not quite as pronounced as among women (34 percent in 2020).
As in the first year of the pandemic, the proportion of those who had particularly strong confidence in their business ventures also increased in 2021. These so-called opportunity-driven startups are, on average, more resilient and require more labor. Their share rose from 80 to 82 percent. Startups driven by a lack of alternatives remained at a low of 91.000 (15 percent).
In 2021, significantly more startups were digital and internet-based , reaching their highest levels to date with shares of 31 percent and 41 percent of all startup activity.
Most new businesses (85 percent) are newly founded ; these companies did not exist before. Financial risks and financing difficulties remain the biggest barriers to starting a business.
Around 30 percent of founders abandon their business within three years of operation. After five years, almost 60 percent are still active. The reasons for abandoning the business are varied.
32 of the founders drop out within the first five years for personal reasons , i.e., without direct economic necessity. These reasons include family burdens, stress, illness, dissatisfaction with the income earned, or because a better job alternative became available.
Despite a slightly declining planning rate, the company expects start-up activity in 2022 to be at a similar level to 2021.
Source: KfW
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