The number of start-ups in Germany has halved since 2003

The start-up landscape is still divided into East and West, as a study by the IfM shows. Unknown districts also surprise with a high start-up intensity.

In 2003, there were 507,000 commercial start-ups in Germany; in 2019, there were only 266,000 - meaning the number has almost halved. The Institut für Mittelstandsforschung (IfM) Bonn looked at start-up activity in Germany's districts between 2003 and 2019 and came to the conclusion that start-up activity has decreased, falling by an average of 4.3 percent annually. However, five regions are surprising: in the districts of Görlitz, Marburg-Biedenkopf and Teltow-Fläming as well as in the cities of Leverkusen and Mülheim an der Ruhr, more start-ups were founded each year than in the previous year.

In contrast to the simple count of start-ups per district, the IfM has combined the population figure with the number of start-ups to determine the start-up intensity. Based on the figures alone, the well-known cities of Berlin, Hamburg, Cologne and Munich led the way in terms of start-ups in 2019.

Offenbach surprises

In terms of start-up intensity, on the other hand, the range is widely spread between 22.8 start-ups per 10,000 employable persons in Sonneberg and 126.9 start-ups in Leverkusen. Only eight other districts had more than 90 start-ups, often in the vicinity of large cities: Schwabach near Nuremberg, Görlitz, Marburg-Biedenkopf or Offenbach. The city near Frankfurt am Main is the major exception in the study and is responsible for the increase in the overall maximum number of start-ups in the statistics: Offenbach's start-up intensity showed the highest intensity every year between 2005 and 2013; the IfM attributes the decline thereafter to the "decrease in start-ups from other Eastern European EU countries as a result of the onset of the free movement of workers for people from Bulgaria and Romania at the beginning of 2014".

Fundamentally striking: In 2019, places in western Germany in particular had high start-up intensities, with Bavaria and Hesse leading the way. Districts with few start-ups are mainly found in Thuringia, which contains eight of the 20 districts with the fewest start-ups. They are joined by districts in Sachen, Saxony-Anhalt and Baden-Württemberg.

This puts Baden-Württemberg, like Bavaria, in the top and flop 20 for start-up intensity. The IfM has excluded 2020 due to the coronavirus crisis, but Baden-Württemberg might have done well to do so. As the state's newly published Start-up Atlas shows, 70% of the start-ups included in the atlas have been in existence since 2019 or later - 600 of which are in the pre-seed phase.

The proportion of female founders is low

However, the champion federal states in terms of start-up intensity have another thing in common in addition to their concentration in western Germany. As the Start-up Atlas breaks down, the proportion of female founders is low: in North Rhine-Westphalia it is 12%, in Baden-Württemberg 14%, in Hesse 15% and in Bavaria 16%. The front-runner here is a federal state that has not yet been mentioned: In Mecklenburg-Western Pomerania, 31 percent of start-ups are founded by women. This is followed in the statistics by the federal state of Brandenburg with a 20 percent share of female founders, which is also home to one of the surprising winners of the districts with a high start-up intensity: Teltow-Fläming.

In addition to the IfM's assumption that the regulation on the free movement of workers has an influence on start-up intensity, other factors can also be identified. As the institute writes, the start-up subsidy, which was introduced at the end of 2011, certainly also had an influence on start-ups. While the financial crisis led to an increase in start-ups due to unemployment, declines in the statistics up to 2008 can be attributed to the relaxed situation on the labor market.

In addition, there are districts that show a particularly large difference in start-up intensity between 2003 and 2019; it would be interesting to take a closer look at the conditions here. The biggest winners are Ansbach, Delmenhorst and Wilhelmshaven. Here, too, Hesse dominates as a federal state, with Saxony leading in the other direction. The districts that experienced the greatest decline are Dithmarschen, Rotenburg Wümme and Esslingen.