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. In addition, unknown counties 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 - so the number has almost halved. The Institute for SME Research (IfM) Bonn looked at start-up activity between 2003 and 2019 in Germany's counties and came to the conclusion: start-up activity has declined, 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, even more people have founded a company in each year than in the previous year.

In contrast to the simple count of start-ups per district, the IfM has combined population figures with start-ups to determine start-up intensity. Measured only by the numbers, the frontrunners in terms of start-ups in 2019 are the old familiar cities of Berlin, Hamburg, Cologne and Munich.

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 value 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 Eastern European EU countries as a result of the onset of the free movement of workers for persons from Bulgaria and Romania at the beginning of 2014".

Basically, what stands out is: High start-up intensities in 2019 are mainly found in places in the west of Germany, with Bavaria and Hesse leading the way. Counties with few start-ups are mainly found in Thuringia, which contains eight of the 20 counties with the fewest start-ups. Next to them are districts in Sachen, Sachsen-Anhalt and Baden-Württemberg.

This means that Baden-Württemberg, like Bavaria, is among the top and flop 20 in terms of start-up intensity. IfM excluded 2020 due to the Corona crisis, Baden-Württemberg might have done well. As the state's newly released Start-up Atlas shows, 70 percent of the start-ups the atlas covers currently exist since 2019 or later - 600 of which are in the pre-seed phase.

The percentage of women founding startups is low

The champion states in terms of startup intensity, however, have another thing in common besides their concentration in western Germany. As the Start-up Atlas reveals, the proportion of women founders is low: in North Rhine-Westphalia it is 12 percent, in Baden-Württemberg 14 percent, in Hesse 15 percent and in Bavaria 16 percent. 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 the start-up intensity, other factors can be identified. However, as the institute writes, the start-up subsidy, which was adopted 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 labour market.

In addition, there are counties that show a particularly large difference in start-up intensity between 2003 and 2019, here a closer look at the conditions would be interesting. The biggest winners are Ansbach, Delmenhorst and Wilhelmshaven. Again, Hesse dominates as a state, and in the other direction it is Saxony. Districts that experienced the greatest decline are Dithmarschen, Rotenburg Wümme and Esslingen an.