Number of business founders in Germany still rising for the time being – with a slowdown in the foreseeable future

• Total of 915,000 start-ups in 2014
• Importance of freelance sectors growing
• No impetus from the economy or labour market for start-up activity in 2015

In 2014, the number of business start-ups in Germany was still rising. According to the 2015 KfW Start-up Monitor, around 915,000 people took the plunge into self-employment last year – about 47,000 more than in 2013. The rise is the result of an increase in full-time founders (+87,000 to 393,000), despite a fall in part-time founders (-40,000 to 522,000). According to a recent analysis conducted by KfW Research, start-up activity was driven by founders in the freelance sectors. The number of these start-ups rose by 61,000 to 368,000. In commercial sectors, on the other hand, the number of start-ups fell by 14,000 to about 547,000 in 2014.

Freelancing professions include corporate consultancy, coaching, software engineering and engineering services. The trend towards self-employment in these sectors has been observed for some time now, and is accompanied by a growing proportion of business founders with academic qualifications. In 2014, the proportion of business start-ups in the freelance sectors surpassed 40% for the first time.

"The continued growth in the number of business start-ups is good news for the German economy," commented Dr Jörg Zeuner, Chief Economist at KfW. "Business founders challenge established companies and are more likely to tap into new markets, promoting both progress and competition".

However, KfW Research expects start-up activity to fall slightly during the current year. The growth of the German economy in 2015 will be similar to what we saw in 2014. This means that the economy will not be providing any additional impetus for start-up activity. And since the prospects of finding a job remain good, the labour market is also not generating any pressure to go self-employed. "Start-up activity is likely to slow down again in 2015," according to Zeuner.

Most German founders traditionally enter the market with new companies. In 2014, three quarters of all business founders became self-employed by starting a new company. Only 16% chose to invest and get involved in an existing company, and only 8% opted to acquire an established enterprise. “It would be good to see people take more of an interest in the issue of corporate succession. The heads of more than half a million small and medium-sized enterprises intend to hand their companies over to a successor within the next two years. This opens up exciting opportunities that should be taken advantage of,” declared KfW’s Chief Economist Zeuner.

Other key findings of the KfW Start-Up Monitor in brief:

• Opportunity most common motivation: the stable economic conditions and the strong labour market in 2014 meant that only 30% of the founders went self-employed due to a lack of alternative employment. Business founders were much more likely to cite a desire to implement a business idea as their motivation (48%). Personal or financial motives played a secondary role.
• Growing effect on employment: newly established companies (excluding succession and active participations) created a total of 745,000 FTE positions in 2014 – an increase of more than 140,000 in comparison to the previous year. This includes the jobs the business founders created for themselves (453,000) as well as 292,000 FTE positions for employees.
• Strong share of women in full-time start-up activity: 43% of all business founders were women in 2014 – marking a repeat of the record figure achieved in the previous year. Female principals accounted for 41% of all full-time founders (previous year: 33%), thus achieving a new record. The share of women among part-time founders, on the other hand, fell slightly to 44%.

You can find the full 2015 KfW Start-up Monitor study and more press materials on the subject (including diagrams, a video statement from Dr Jörg Zeuner, examples of promotional projects) at: www.kfw.de/existenzgruendung.

About the KfW Start-up Monitor

The KfW Start-up Monitor is a representative annual population survey of start-up activity in Germany. The study is based on a broad definition of start-up activity (full and part-time founders, commercial and freelance founders, new start-ups, corporate succession and investments). In this way, the KfW Start-up Monitor provides a comprehensive picture of start-up activity. The telephone survey has been conducted since the year 2000. The latest figures stem from interviews with a total of 50,000 randomly selected residents of Germany conducted between July and December 2014 in a representative survey.