Start-ups in 2019 increased for the first time in five years – coronavirus crisis hampers entrepreneurial activity in 2020
Press Release from 2020-07-02 / Group
KfW Entrepreneurship Monitor
- Number of start-ups has grown by 58,000 to 605,000
- One in three start-ups is Internet-based
- Berlin tops list of German federal states
The current KfW Entrepreneurship Monitor shows that start-up activity in Germany picked up again in 2019 for the first time in five years. The number of newly founded businesses rose to 605,000 (+58,000). Start-up plans also increased in 2019. But in the face of the coronavirus crisis it is doubtful whether these plans will translate into start-ups in 2020.
“The outlook for entrepreneurial activity in 2020 was positive but has been clouded by the coronavirus pandemic. I expect some of the start-up plans to be put off in response to the current threat facing the livelihoods of many self-employed professionals”, said Dr Fritzi Köhler-Geib, Chief Economist of KfW. “But the crisis will also act as a driver of entrepreneurial activity. With unemployment rising as a result of the crisis, the number of necessity start-ups – new businesses created for lack of better income alternatives – will rise. It remains to be seen which effect will ultimately prevail.”
The higher number of businesses founded in 2019 is the result of a noticeable increase in part-time start-ups, which rose by 85,000 to 377,000. At the same time, full-time start-ups continued to fall to a new low of 228,000 (-27,000). After four years of declining male start-up activity, 2019 saw an increase of 59,000 to 390,000. The number of female entrepreneurs, in contrast, stagnated and remained almost unchanged from the previous year, at 215,000 (-1,000). The share of female start-ups thus dropped to 36% (2018: 40%).
A closer look at the structure of entrepreneurial activity reveals positive trends. Innovative start-ups and fast-growth start-ups increased moderately (from 11% to 13% and from 24% to 25% of all start-ups). There was a noticeable increase in Internet-based and digital start-ups (from 25% to 32% and from 22% to 28%). “The trend towards more innovative, digital and Internet-based start-ups is positive because they create new markets, drive structural change and strengthen our economy’s competitiveness”, said Dr Fritzi Köhler-Geib.
In the state ranking of entrepreneurial activity, Berlin still clearly tops the list. On average for the years 2017 to 2019, 198 out of 10,000 employable persons started working for themselves there each year. Brandenburg overtook Hamburg, moving up to second place for the first time, with 155 start-ups per 10,000 employable persons. It can be assumed that the above-average entrepreneurial activity in Berlin is radiating to its periphery because business founders are shifting their locations and residences into the city’s outlying suburbs for cost reasons, for example. Brandenburg benefits from this directly. Hamburg is in third place with 122 entrepreneurs per 10,000 employable persons, one notch ahead of Bavaria’s 121.
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 the 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.