A study by KfW found that there are 154,000 social entrepreneurs in Germany. One in four develops their own technological innovations to market maturity.
The 154,000 counted by KfW social entrepreneurs run 108,000 companies. Social entrepreneurs thus represent approximately 9 percent of all young entrepreneurs in 2017. Among female founders, social entrepreneurs account for 12 percent, compared to 7 percent among men. The study authors define young entrepreneurs as all those who have been active in the five years prior to the survey.
"Social entrepreneurs are innovative in two ways. In addition to profit, they have anchored a social or ecological concern at the top of their goal system and forgo potential returns,"
says Jörg Zeuner, Chief Economist of the KfW Banking Group.
"Furthermore, they are often innovative in the 'classic' sense: Almost a third of young social entrepreneurs offer market innovations that have never existed before in their target market. One in four develops their own technological innovations to market maturity. Many of the so-called 'social entrepreneurs' are therefore pioneers for sustainable economic development."
By comparison, among other young entrepreneurs, only one in eight is active with market innovations and only one in nine is involved in the development of technological innovations.
How German social entrepreneurs tick
The study uncovered a number of differences between social startups and other start-ups: 60 percent of social entrepreneurs are opportunity founders, meaning they want to exploit a specific business idea. Among all start-ups, this figure is 49 percent. Only 17 percent of social entrepreneurs start a business because they lack a better employment alternative.
Young social entrepreneurs are more likely to be team players: one in four starts a business as part of a team, and one in three employs staff. One in five other young entrepreneurs starts a business solo, and only one in four employs staff.
Social entrepreneurs are more likely to need capital than other young entrepreneurs: 75 percent versus 60 percent. To meet this need, they more often rely on grants and alternative financing sources such as foundation funds, investor funds, or even money from crowdfunding campaigns.
Compared to other start-ups, social entrepreneurs are significantly more concerned about their commercial skills. However, there are hardly any differences regarding many other stress factors, such as bureaucracy or balancing work and family life. The study authors therefore recommend providing social entrepreneurs with more targeted support in acquiring commercial know-how.
