Start-ups of previously unsuccessful founders fail more frequently

Apparently not all founders learn from their mistakes, as a study shows. The fact that they also fail with their next start-up could be due to a lack of entrepreneurial skills.

A study by the Leibniz Centre for European Economic Research (ZEW) and the Institute for SME Research at the University of Mannheim has shown that start-ups by founders who have already failed are more likely to fail than first-time founders. For example, the probability that a start-up by a failed founder will still exist after one year is 3.8 percentage points lower than for first-time founders.

The probability of failing again is particularly high if the founders had to file for bankruptcy for their previous start-up. In this case, it is even 3.9 percentage points more likely that they will have to file for bankruptcy again for their new start-up. According to the study, the reason for this could be that the failed founders lack entrepreneurial skills. Differences in age, educational qualifications, experience with management functions and industry, on the other hand, would not play a role.

Based on the results, study author Bettina Müller from the Institute for SME Research at the University of Mannheim criticizes the German government's plans to support failed founders with a start-up support programme. "Our study indicates that a differentiated approach would make more sense here," says Müller. She suggests providing targeted support to suitable entrepreneurs from the group of failed founders.

The study is based on the ZEW Start-up Panel and the Institute for Employment Research. The development of around 6,000 companies is tracked over several years. To this end, the companies are interviewed by telephone every year.