KfW Start-up Report: Number of start-ups in Germany continues to grow

• Start-up numbers have increased to 70,000 businesses (+10,000)
• Share of female start-up founders averages 19%
• Promoting female interest in STEM education and teaching business skills in the school classroom can encourage more female business start-ups in the long term

The number of innovation- or growth-driven young enterprises in Germany has increased again. In 2018 there were 70,000 start-ups, around 10,000 more than in the previous year. These are the findings of the new KfW Start-up Report, which examines the number and structure of innovation- or growth-driven enterprises that have been operating for not more than five years. The report has found that both female and male start-up founders typically run their businesses on a full-time basis, have a start-up team or employees, and are innovation- or growth-driven.

Because of the differences in how men and women approach entrepreneurship, the proportion of female start-up founders is significantly lower. Women are less likely to set up a business geared to innovation or growth, on a full-time basis, in a team or with employees. Thus, the share of female entrepreneurs in newly founded businesses averaged 39% over the years 2016–2018. However, the proportion of female entrepreneurs in the number of start-ups across these years was only around half that, at 19% .

Innovation- or growth-orientation are the two main aspects around which the share of female start-ups can be increased. Innovation-oriented businesses are often technology-related. The technological savviness of male and female founders, however, correlates relatively closely with their educational background. Graduates of STEM degree courses and those with technical vocational training have higher technological affinity than others. These career paths in particular are less popular among women. Moreover, growth orientation ist often a matter of education and training. Growth ambitions require confidence in one’s own capabilities. People who doubt their business skills are much less focused on growth, whether they are male or female, but this effect is more common among women than men.

The Chief Economist of KfW, Dr Fritzi Köhler-Geib, commented on the findings of the KfW Start-up Report as follows: “The start-up scene in Germany lacks women. But Germany cannot afford to miss the innovative impetus and business momentum they provide. Efforts aimed at attracting women to careers in technology and science need to be stepped up and obstacles removed. In addition, economic knowledge and skills should be taught already at school. Not least, access to venture capital for female entrepreneurs needs to be improved, and that would positively impact the entire start-up community. After all, more successful role models would motivate more women.”

The KfW Start-up Report is available for download at www.kfw.de/KfW-Group/Service/Download-Center/Research-(EN)/KfW-Gründungsmonitor.