KfW reports more start-ups

These figures are from BEFORE the coronavirus crisis. The latter left many companies in a critical situation. The current impact will only become apparent in the 2020 surveys.

This article is part of the special feature GründerNavi – for founders and young companies

A preliminary analysis of the current KfW Start-up Monitor shows that start-up activity in Germany increased in 2019. With 605.000 new businesses, 58.000 more people became self-employed than in the previous year. This corresponds to an increase of almost eleven percent . The start-up rate , i.e., the proportion of entrepreneurs in the population aged 18–64, thus rose slightly to 1,2% (2018: 1,1%).

The scissors open again

In 2018, the balance between full-time and part-time business start-ups was higher than ever before. However, in 2019, the gap widened again. The number of full -time start-ups fell to 228.000 (-27.000) – the lowest number since the start of the time series. Since 2002, the number of annual full-time start-ups has thus decreased by around two-thirds . In contrast, the number of part-time start-ups increased to 377.000 (+85.000). This marked a temporary halt to the downward trend, after the number of part-time start-ups had almost halved between 2013 and 2018 alone.

Positive economic stimulus in 2019 was able to break the downward trend

Overall economic development in 2019 had a positive impact on business start-up activity . Domestic demand increased by 1,0% in real terms (2018: +2,1%), while the unemployment rate fell by a further 0,2 percentage points to 3,0% (2018: 3,2%). Thus, the positive economic pull outweighed the negative absorption effect of the labor market. Unlike the previous year, this impetus broke the negative trend in start-up activity that had persisted for years.

Solo founders are on the rise

Most founders start their own businesses from scratch . They begin from the ground up, without relying on previously existing business units. Their share has risen almost continuously since 2002 to its current peak of 79 percent . Startups resulting from the acquisition of an existing company remain slightly above their long-term average at 11 percent. The distribution of startups according to their initial size is very stable. Solo founders outnumber team founders by a ratio of approximately 8:2 . The majority of startups do not employ any staff.

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Corona effects cannot yet be estimated

A large proportion of founders become self-employed to seize a business opportunity. The share of these " opportunity-driven startups " rose slightly to 73 percent in 2019. Against the backdrop of the overall increase in the number of startups, the number of opportunity-driven startups rose to 439.000 (2018: 382.000).

Outlook for 2020 : An increase in the number of business start-ups due to necessity is expected for 2020. However, given the precarious situation many self-employed individuals face due to the current coronavirus crisis , significantly more business plans will likely be abandoned than usual. It remains to be seen which effect will ultimately prevail.