Last year, according to KfW Start-up Monitor 537,000 people took the leap into self-employment. This represents approximately 68,000 start-ups, or 11 percent, fewer than in 2019. The number of full-time start-ups fell by 27,000, or 12 percent, to a new low of 201,000. 41,000 fewer people started part-time businesses than in 2019, falling by 11 percent to 336,000.
The number of start-ups by men fell particularly sharply. In 2020, 332,000 men became self-employed – 58,000, or 15 percent, fewer than in the previous year. The number of female founders, in contrast, fell by only 5 percent, from 215,000 to 205,000. The proportion of female start-ups rose from 36 to 38 percent. KfW It is suspected that women interested in starting a business adapted more quickly to the new crisis conditions and therefore realized their start-up plans more often than men. For example, 52 percent of female founders adapted their business models last year, compared to only 39 percent of male founders.
Fewer start-ups out of necessity
The Corona crisis is also having a clear impact on the number of abandoned start-ups: 40 percent stated that they had abandoned their own company due to unprofitability – twice as many as in 2019. In 56 percent of the abandonments, the Corona crisis was the decisive factor.
Only 16 percent of start-ups were created out of necessity, i.e., due to a lack of better employment alternatives. The share of so-called opportunity start-ups rose to 80 percent. In 2019, the ratio of necessity to opportunity start-ups was 23 percent to 73 percent. KfW suspects that short-time work contributed to reducing the number of emergency start-ups.
“2021 promises to be a good year for startups”
Last year, the coronavirus pandemic also put a damper on many people's start-up plans. Only 4.4 percent of 18- to 64-year-olds were aiming for self-employment, compared to 6.4 percent in 2019. The proportion of those planning to start their actual business within the next 12 months fell from 3.2 percent to 2.6 percent. However, KfW expects an increase in start-up activity this year despite the declining planning rate.
"After the corona-related slump in start-up activity in Germany, 2021 promises to be a good year for start-ups. The economic upturn is providing tailwind, and the labor market is also likely to have a positive effect on start-up activity,"
says Fritzi Köhler-Geib, Chief Economist at KfW.
"In addition, many startup planners actually wanted to start a business in 2020—they simply postponed their projects due to the coronavirus crisis. They are well advanced in the planning process and close to implementation. This year's startup activity should also benefit from this."
