Entrepreneurial activity returned to pre-pandemic level in 2021

• Number of start-ups grew by 13 % to 607,000
• More full-time and part-time start-ups
• Share of opportunity start-ups grew to 82 %

A preliminary evaluation by the KfW Entrepreneurship Monitor has revealed that entrepreneurial activity in Germany increased again in Germany in 2021, making up for the decline during the first year of the pandemic. Entrepreneurs launched 607,000 new businesses, with approx. 70,000 more persons venturing into self-employment than in 2020 – a 13 % increase. This growth was split evenly between full-time (+35,000 to 236,000, or +18 %) and part-time start-ups (+35,000 to 371,000, or +10 %). The entrepreneur rate rose to 119 new businesses per 10,000 persons aged 18 to 64 years, up from 104 in 2020.

“The coronavirus pandemic had a massive impact on start-up activity in Germany in 2020. Not only was the number of new businesses much lower, but there were also significantly fewer start-up plans. But since many just delayed their plans due to the pandemic and eventually put them into practice last year, entrepreneurial activity recovered from the pandemic slump in 2021. The move into self-employment was made by 607,000 persons – roughly as many as in 2019 before the outbreak of the pandemic”, said Dr Fritzi Köhler-Geib, Chief Economist of KfW.

Since the outbreak of the crisis, a particularly large proportion of start-ups have been realised by individuals who had great confidence in their start-up project. Evidence of this is the high share of “opportunity start-ups”, in which entrepreneurs seized an occasion to start a business. In 2021 that share grew by a further two percentage points on the previous year to 82 %. By contrast, the share of necessity start-ups – businesses launched for lack of better income alternatives – remained at a very low level of 15 %. The widespread use of short-time work is likely to have contributed to the fact that not more people moved into self-employment out of necessity.

With SMEs plagued by succession troubles, the bad news is that by far the largest share of entrepreneurs launch a new business and that takeovers of existing businesses play only a minor role in entrepreneurial activity. Newly founded businesses reached a record rate of 85 % in 2021. The share of solo start-ups rose to 81 %, slightly above the long-term average.

Note:

The new KfW Entrepreneurship Monitor is scheduled to be published in June 2022. The current preliminary evaluation can be retrieved at www.kfw.de/kompakt

The dataset:

The KfW Entrepreneurship Monitor is a representative telephone survey of the population on start-up activity in Germany which has been conducted annually since the year 2000. It is based on information provided by 50,000 randomly selected persons domiciled in Germany. It covers a broad range of start-ups: full-time and part-time entrepreneurs, self-employed professionals and business owners, new businesses and takeovers. The KfW Entrepreneurship Monitor thus provides a comprehensive picture of entrepreneurial activity in Germany. To find out more, go to www.kfw.de/gruendungsmonitor.