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On August 15, 2023, the CEO of the German start-up association, Miele, expressed his wish for increased political attention and improved framework conditions for the local start-up scene. The German government, he said, should give the industry more priority, particularly to promote innovative strength and future orientation. Compared to countries such as the United Kingdom, the Netherlands and France, Germany is still at a disadvantage when it comes to framework conditions for startups. Areas such as immigration of skilled workers, digitization and access to capital are better developed in other European countries.
The competition for talented professionals is particularly demanding, and German startups often lose out. The industry focuses on start-ups with innovative business ideas and great growth potential. These start-ups are characterized by young founders and employees who focus on a digital orientation from the outset. Overall, the association is calling for better support from the political side to strengthen Germany's position in the European startup competition.
From the fight against uncertainty to a possible turnaround: More startups in the first half of 2023
The past year has been a touchstone for many young companies in Germany, marked by wars, economic instability and rising interest rates. But now there are signs of a possible turnaround as startup formation picks up steam in the first half of 2023
According to a study by the German Startups Association in collaboration with industry service Startupdetector, 16 percent more companies found their way into the business world compared to the previous six months, representing nearly 1,300 startups.
The once-booming German startup scene experienced a peak period in 2021, with record levels of funding from investors. The COVID-19 pandemic acted as a catalyst for digitization in areas such as finance, food delivery and online shopping. However, the environment changed with the Russian war on Ukraine and rising interest rates and uncertainty in the economy. Investors pulled back, and many startups were forced to cut jobs.
The number of start-ups also showed a downward trend. After the record year of 2021 with almost 3,200 startups, this number dropped to 2619 in 2022. Nevertheless, the first half of 2023 shows a positive development, even if the total number of startups remains comparatively low at just under 1,300.
The tourism, mobility, food and software sectors in particular saw an increase in startups compared to previous periods. In contrast, there was less startup activity in the blockchain and cryptocurrencies sectors.
The cities of Berlin and Hamburg stood out in particular. Berlin saw a 40 percent increase in startups (262) after a decline in the previous year. This is particularly noteworthy given that Berlin had to contend with difficult financing conditions last year. Hamburg also recorded significant growth with 90 new startups. In Munich, on the other hand, the startup rate rose only slightly by two percent to 95 companies.
In terms of population, however, Munich remains the leader: in the twelve months from July 2022 to June 2023, 12.6 new start-ups were counted per 100,000 inhabitants in arithmetical terms. This is slightly higher than in Berlin with 12.3 start-ups per 100,000 inhabitants.
The optimistic signs of rising startup activity give hope that German startups can recover from the challenges of the past year and experience a new upswing.
The German economy shows mixed developments in the first half of 2023 in terms of business start-ups and discontinuations. According to the latest data from the Federal Statistical Office (Destatis), the number of start-ups of larger businesses remains almost unchanged, while new business start-ups show a significant overall increase and complete business discontinuations also rise strongly.
In the period from January to June 2023, around 62,700 establishments with a legal form and number of employees indicating greater economic importance were founded in Germany. This figure reflects a minimal decrease of 0.1% compared with the same half of the previous year. This result shows that, despite slight fluctuations, there is a constant interest in creating significant economic entities. At the same time, however, about 50,600 establishments with greater economic significance completely deregistered their trades, an increase of 12.4% compared to the first half of 2022.
It is worth highlighting the remarkable increase in new business startups overall during the same period. With approximately 317,600 startups, Germany recorded an increase of 10.2% compared to the corresponding half of the previous year. This testimony underscores the ongoing interest and commitment of entrepreneurs to build new businesses and put innovative ideas into action.
The total number of business registrations in the first half of 2023 increased by 8.9% year-on-year to around 381,200. These figures include not only new business start-ups, but also business takeovers, conversions and moves from other registration districts. This illustrates the diversity of entrepreneurial activity and the different ways in which businesses can start and grow.
Not to be ignored is the increase in trade relinquishments, which was also observed in the first half of 2023. With around 246,500 complete commercial tasks, Germany recorded a striking increase of 14.0% compared to the same half of the previous year. These figures include not only trade relinquishments, but also business transfers, conversions, and departures to other reporting districts.
The data source's methodological notes clarify the criteria for establishments of greater economic importance, including legal entities, partnerships and natural persons registered in the commercial register or employing workers. In addition, the data source highlights that technical issues have led to a change in the classification of small businesses and sideline businesses, which has limited the comparability of the results.
In summary, the statistical data for the first half of 2023 show a multifaceted picture of the corporate landscape in Germany. Despite slight fluctuations, interest in business start-ups remains, while the diversity of entrepreneurial activities plays an important role in the country's economic development.