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Press Release from 2017-01-23 / Group

“Digital” entrepreneurs strengthen Germany’s innovative power

  • One in five entrepreneurs rely on digital offers
  • “Digital” entrepreneurs innovate twice as often as “non-digital” ones
  • “Digital” entrepreneurs require follow-up funding more often

Start-up activity in Germany has recently hit rock bottom, although it has become more innovative. Today six per cent more entrepreneurs are doing research and development on technological innovations. This is a remarkable and positive sign because it is primarily innovative enterprises that create sustainable jobs and bolster the economy’s competitiveness. A KfW Research analysis entitled “Digital entrepreneurs take on a pioneering role” shows that “digital” entrepreneurs in particular contribute more than average to strengthening Germany’s innovative power.

Products offered by “digital entrepreneurs” (2015: 166,000) can be used only with the aid of digital technologies. “‘Digital’ entrepreneurs innovate twice as much as ‘non-digital’ ones. They focus on ‘novelty’ more than other entre-preneurs. As a result, they have a strong impact on the economy’s competitive-ness and development”, said Dr Jörg Zeuner, Chief Economist of KfW. Of the “digital” entrepreneurs surveyed, 12 per cent indicated that their product was a novelty to supra-regional markets because it had not been available yet, at least not in Germany. For “non-digital” entrepreneurs that share was five per cent. Besides, 19 per cent of “digital” entrepreneurs innovate: they conduct research and development to refine their product’s technology. Among “non-digital” entrepreneurs, that share is only 10 per cent.

Seven in ten “digital” entrepreneurs target a supra-regional sales market while only two in ten of the “non-digital” entrepreneurs do the same. This is likely because it is easier to reach customers further afield using “digital” sales channels.

The stronger focus on innovation and the larger target markets mean that “digital” entrepreneurs have a greater need for follow-up funding. One in three “digital” entrepreneurs plan to acquire funds from external capital providers over a two-year period (2016/2017), but only one in five “non-digital” entrepreneurs. Yet these are the ones who more often require higher amounts of capital exceeding EUR 25,000 (9% versus 5%) and in excess of EUR 100,000 (8% versus 5%). “After the start-up phase, ‘digital’ entrepreneurs require suitable follow-up funding in order to further expand their business activity for the international market. It is important to secure this funding so that ‘digital’ enterprises can put their innovative prowess to use and fulfil their special economic role”, said Dr Zeuner.

Note:

Digital entrepreneurs take on a pioneering role
(English version forthcoming)

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Ms.

Sonja Höpfner

Press Office KfW Capital

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