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Start-ups in Germany slump sharply - Inflation takes over what the virus failed to do

08/24/2023 | by Patrick Fischer, M.Sc., Founder & Data Scientist: FDS

An analysis of commercial register data shows that start-up activity in Germany has plummeted this year after the corona pandemic ended in 2022.

In recent years, Germany has experienced an unprecedented economic roller coaster ride, ranging from the corona pandemic to inflation. But while the pandemic has put many businesses to the test, and even forced some to close, inflation has managed to affect startup activity in the country in a very different way. A detailed analysis of commercial register data over the past five years sheds light on this remarkable trend.

A look at the data

The commercial register data show a significant decrease in the number of company start-ups in Germany since 2022. In particular in the years 2019, 2020 and 2021, the number of start-ups remained relatively stable, with fluctuations being recorded in the various calendar weeks. In 2019, the year started with 2,880 foundations in the 20th calendar week, but reached a low point of 2,354 foundations in the 25th calendar week before it rose again.

The post-pandemic tipping point

However, times changed after the end of the Corona pandemic in 2022. While the economic outlook was initially optimistic, analysis of the data for this year shows a striking void in start-up activity. Only 1,878 and 2,414 start-ups were recorded in calendar weeks 24 and 23, which represents a drastic decline compared to previous years, even if these figures do not include the start-up of associations. Post-pandemic uncertainty, coupled with economic uncertainties and rising inflation, seem to deter potential entrepreneurs.

Inflation as the new stumbling block

While the Corona pandemic has undoubtedly had a significant impact on business activity, it is worth noting that inflation has emerged as a new factor negatively affecting start-up activity in Germany. Inflation can increase the cost of starting a business as commodity, rent and labor prices rise. This could make budding entrepreneurs reluctant to start new businesses as economic uncertainty and rising costs pose a significant risk.

Outlook and challenges

Current data suggests that start-up activities in Germany are facing serious challenges. As the economic landscape continues to be characterized by uncertainty, it will be crucial for governments, business associations and companies alike to devise strategies to encourage entrepreneurship and support budding founders. The effects of inflation on start-up activity illustrate the need for a holistic approach to ensure economic stability and growth in Germany.

Overall, the analysis of the commercial register data makes it clear that start-up activity in Germany is influenced by a variety of factors, from the pandemic to inflation. The coming months and years will show whether and how Germany can overcome these challenges in order to stimulate start-up activities in the country again.

Foundation figures over the years

Year KW 20 KW 21 KW 22 KW 23 KW 24 KW 25 KW 26 KW 27 KW 28 KW 29 KW 30 KW 31 KW 32 KW 33
2019 2880 2746 2148 2708 2157 2354 2793 2785 2801 2770 2714 2770 2596 2692
2020 2697 2069 2625 2121 2237 2807 2840 3048 3034 2735 2954 2861 2682 2809
2021 3458 2744 2857 3467 3286 3266 3334 3181 3278 3068 3219 3046 2939 2992
2022 2344 2299 2708 2414 1878 2345 2372 1993 2138 2111 2431 - - -
2023 1692 1821 1327 1861 1604 1791 2235 1749 1703 1888 1755 1128 2294 819

Foundation figures chart

Data sources: Commercial Register 2019-2021, StartupDetector Newsletter 2022-2023 (excluding associations).

Note: Data missing for week 31-33/2022

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Key findings of the GEM country report Germany 2021: Founding activity and impact of the COVID 19 pandemic.

08/24/2023 | by Patrick Fischer, M.Sc., Founder & Data Scientist: FDS

The GEM country report Germany 2021 presents pleasing results regarding start-up activities in 2021 and their connection to the COVID-19 pandemic. The start-up rate, measured by the total early-stage entrepreneurial activity (TEA), has increased significantly compared to the previous year. This could be due to a positive response from business and the adaptability of those looking to start a business during the pandemic.

Start-up rate at the second highest level since 1999

The TEA rate, which represents the proportion of 18-64 year olds in Germany who have founded a company or are in the process of founding one, reached the second highest value in 2021 since the survey began in 1999 – 6.9%. This represents an increase of 2.1 percentage points compared to the previous year (4.8%). This increase suggests that, despite the ongoing uncertainties due to the pandemic, the willingness to start a business has increased in Germany.

Pandemic as driver for new business opportunities

Interestingly, more than a third of the TEA founders surveyed appear to indicate that the COVID-19 pandemic has opened up new business opportunities. This makes it clear that in the midst of the crisis, entrepreneurial opportunities can also arise that lead to new start-ups. In 2020, that proportion was even lower (a quarter of TEA startups were based on pandemic-related opportunities).

More focus on digital sales channels

Although around 76% of TEA founders in Germany have set up their sales channels digitally, the report shows that there is still room for further progress in the field of digitalization. In particular, cooperation between established companies and young, up-and-coming start-ups could lead to a win-win situation. Digital sales platforms and the customers of established companies could offer young companies faster market access.

Gender differences in start-up activity

An interesting aspect highlighted in the report concerns gender disparities in start-up activity. This shows that the gender gap, i.e. the difference between the start-up activities of men and women, was reduced during the COVID-19 pandemic. This applies above all to the prospective founders (nascent entrepreneurs), whose proportion is equalizing. The results indicate that women are more likely to intend to start a business, but are less likely to put them into practice than men.

Measures to promote start-ups by women

The report proposes various measures to further reduce the gender gap and to promote the start-up activities of women. This includes the expansion of childcare options, the promotion of women in business and STEM subjects and the presence of successful female founders as role models. Access to venture capital for female founders could also be improved, especially in the technology-oriented area.

Conclusion: increase in start-up activities despite the pandemic

The GEM country report Germany 2021 shows that the start-up rate in Germany increased in 2021 despite the ongoing COVID-19 pandemic. This could be due to an increased adaptability of the entrepreneurs, the identification of new entrepreneurial opportunities and the positive reaction of the economic policy. Gender differences in start-up activity have also narrowed during the pandemic, indicating increased support for start-ups by women. In order to further support this trend, targeted measures could be taken to strengthen the framework conditions for women in the start-up world.

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Microsoft Excel Revolutionizes Data Analysis with Python Integration

08/24/2023 | by Patrick Fischer, M.Sc., Founder & Data Scientist: FDS

In a groundbreaking announcement, Microsoft Excel has unveiled a new chapter in data analytics by introducing Python integration to its platform. This momentous stride brings together the power of Python's analytical capabilities and the versatility of Excel's data organization and visualization tools. With the launch of Python in Excel, users can seamlessly merge Python and Excel analytics within the same workbook, ushering in a new era of efficiency and sophistication in data analysis.

A Fusion of Python and Excel: The Next Evolution in Data Analytics

From its inception, Microsoft Excel has been at the forefront of transforming data handling, analysis, and visualization. Now, with Python in Excel, Microsoft takes another leap forward, offering a Public Preview of this groundbreaking integration. The synergy between these two stalwarts in the data world allows users to directly input Python code into Excel cells, with the calculations executed in the Microsoft Cloud. The results, including plots and visualizations, are then seamlessly integrated into the Excel worksheet, all without requiring any intricate setup.

The initial roll-out of Python in Excel is available for those participating in the Microsoft 365 Insiders program, accessed through the Beta Channel in Excel for Windows.

Unveiling the Distinctive Features of Python in Excel

Catering to Analysts' Needs: Excel's familiar tools like formulas, charts, and PivotTables are utilized by millions for data analysis. Now, Python in Excel takes this a step further by natively integrating Python directly into the Excel grid. The new PY function enables users to input Python code directly into Excel cells, offering access to potent Python analytics alongside Excel's trusted features.

Unleashing Python's Power via Anaconda: Python in Excel leverages Anaconda Distribution for Python, a repository embraced by countless data practitioners globally. This integration facilitates access to popular Python libraries like pandas, Matplotlib, and scikit-learn, amplifying the analytical prowess available within Excel.

Security and Cloud Compatibility: Python in Excel operates securely in the Microsoft Cloud environment, utilizing Azure Container Instances for isolated execution. The integration ensures data privacy, restricting Python code's knowledge of users' identities and keeping workbook data isolated and secure.

Team Collaboration Made Effortless: Collaboration takes center stage with Python in Excel. Teams can interact with and refresh Python-powered analytics without grappling with complex installations or management of libraries. Collaboration tools like Microsoft Teams and Outlook seamlessly enable shared workbooks and foster a cohesive working environment.

Microsoft's Commitment to Python: The partnership across various Microsoft teams underscores the company's dedication to enhancing Python's accessibility and integration. Guido van Rossum, Python's creator and Microsoft Distinguished Engineer, lauds this milestone, highlighting the collaborative spirit.

Unlocking New Avenues in Data Analysis

Python in Excel opens up a realm of possibilities, transforming Excel from a traditional spreadsheet tool into an advanced analytical powerhouse. Advanced visualizations utilizing Python's renowned charting libraries, machine learning, predictive analytics, and even data cleaning are now within Excel users' grasp. This integration enhances the workflow of diverse sectors, from education and corporate analytics to financial analysis.

The Road Ahead

With Python in Excel making its debut through the Public Preview for the Microsoft 365 Insiders program, the future holds promise. Expectations are high as Microsoft works on refining the integration, expanding editing experiences, error management, documentation, and more. The integration's potential to revolutionize data analysis and collaboration ensures a keen eye on its evolution.

In this era of data-driven decision-making, Microsoft's Python in Excel heralds a transformative era where two juggernauts, Python and Excel, coalesce to empower analysts and organizations worldwide. The fusion of these platforms unlocks a future of unparalleled data exploration, analysis, and insight generation.

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Startup Ticker Week 33/2023: 819 company startups in Germany

08/24/2023 | by Patrick Fischer, M.Sc., Founder & Data Scientist: FDS
In Germany, 819 companies were founded and entered in the commercial register in the 33rd calendar week.
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The Reality of AI and Jobs: A Look Beyond the Hype

08/23/2023 | by Patrick Fischer, M.Sc., Founder & Data Scientist: FDS

Artificial intelligence (AI) was recently predicted as a possible trigger for a wave of mass unemployment, as various occupations would be threatened by automation. However, the anticipated employment crisis has not materialized, even as AI technologies such as ChatGPT have gained traction.

Despite AI's growth, the job market remains stable, and unemployment rates have not soared as projected. The perceived threat of widespread AI-driven job loss is more complex than initially thought. AI's capabilities are impressive but limited, still unable to handle the majority of tasks that humans perform. Instead of replacing human workers, companies have adopted a strategy of enhancing human performance with AI assistance. This has led to an unexpected outcome: businesses are realizing the challenges of transitioning to an AI-driven workforce.

Industries that were considered ripe for AI disruption, such as law and medicine, are not seeing the mass layoffs initially predicted. For instance, a generative AI tool used by a global law firm aids lawyers in tasks but has not replaced them. In medicine, AI complements radiologists by expediting certain tasks, but it's not equipped to make complex medical decisions.

The reason for AI's limited impact on jobs lies in its inability to replicate the diverse tasks and adaptability that humans bring to the table. While AI can excel at specific tasks, its shortcomings prevent it from fully replacing human workers across various roles.

Reports of companies replacing employees with AI should be taken with caution. Often, these announcements are linked to broader downsizing efforts rather than a seamless transition to AI-driven operations.

While AI's influence on jobs is undeniable, the narrative of massive unemployment is far from accurate. As AI technology advances, certain roles may be displaced, but the value of human skills, adaptability, and nuanced decision-making remains indispensable. In the ongoing AI evolution, the clear lesson is that human potential remains underrated, and the true impact of AI on employment is more nuanced than the initial hype suggested.

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