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Topic - Funding of SMEs

Start-ups: a driving force for growth and competition


Start-ups form the basis for economic growth. New business models not only modernise the economic structure, they also create new jobs.

In Germany, some 300,000 entrepreneurs take the plunge into self-employment each year. Start-ups are of vast significance for the economy: not only do they create new jobs, they also foster competitiveness and innovation in a Social Market Economy.

Creating jobs:

Setting up a business has a positive impact on employment. New start-ups benefit the labour market and create jobs. Start-ups create some 520,000 new full-time jobs each year.

Promoting competition and structural change:

New start-ups increase the number of players competing on the market. Young companies not only challenge existing companies with new products and processes, but also stimulate competition. So start-ups are a driving force for structural change in the economy.

Promoting liberty, diversity and stability in society:

Independent companies play a role in strengthening our democracy and our social fabric. Economic responsibility is spread across many shoulders, a concentration of power is prevented, and entrepreneurial freedom is fostered. The start-up scene is highly diverse. People of foreign origin are playing an increasingly prominent role.

Targeting the development of female entrepreneurs:

43% of all new businesses are founded by women; women account for 46.1% of gainfully active persons aged between 15 and 64 (microcensus). Positive developments can particularly be seen in side-line businesses. In the case of full-time start-ups, women account for 39% of new businesses. Targeted measures can further leverage the potential here, particularly with regard to innovative start-ups.

Four figures on start-ups

Symbolicon für Menschen

percent of people starting out in business
in Germany are between 25 and 34 years old (2016)

Symbolicon für Besprechung

percent of all start-ups
take place in the services sector (2016)

Symbolicon für Glühbirne

percent of people starting up in business
bring new innovations on to the market (2016)

Symbolicon für Frau

percent of all people starting up in business
(full-time/side-line, 2016) are female

A New Age for Entrepreneurship

Strengthening the spirit of entrepreneurship in Germany

The Economic Affairs Ministry’s “New Age for Entrepreneurship” initiative is strengthening the spirit of entrepreneurship in Germany and supporting people starting up their own business.

If our economic growth is to remain strong and dynamic, we need more entrepreneurs who develop new markets and create lasting jobs. The Economic Affairs Ministry’s “New Age for Entrepreneurship” initiative aims to strengthen the spirit of entrepreneurship and to boost the number of start-ups in Germany, by making it more attractive for people to start up their own business. The initiative offers a wide range of measures, financing possibilities and support for young entrepreneurs.

A lot has already been done to breathe life into the new age for entrepreneurship: In the “WOMEN Entrepreneurs” initiative (website in German) some 180 role-model female entrepreneurs are encouraging girls and women to start out in business. The EXIST funding for start-up teams from higher education institutions has been substantially improved. The Act to Reduce Bureaucracy relieves start-ups of red tape, and particularly of reporting requirements for various economic statistics.

The spirit of entrepreneurship and entrepreneurial thinking starts in the classroom. The “Entrepreneurial Spirit in Schools” initiative gives pupils some initial practical experience in exciting business projects and lets them take responsibility in their own student companies.

The “INVEST – Grant for Venture Capital” for business angels investing private capital in innovative young start-up is already tax-exempt, and is being further improved. This is making the programme much more attractive, and will boost the supply of capital to young companies.

The “Deutsche Börse Venture Network”, which was launched at the initiative of the Economic Affairs Ministry, is also intended to improve this situation. It brings together young, fast-growing companies and international investors to ensure effective financing of growth and the establishment of a comprehensive network. The programme consists of a non-public online platform for the initiation of rounds of financing and offers various training and networking events.

Advice for Start-ups

Planning a successful start-up

The route to self-employment consists of many different steps that have to be taken. For this reason, the German government helps entrepreneurs as they set up in business. Information and careful planning are the foundation for a successful start as a new business.

A journey of a thousand miles begins with a single step. This well-known saying particularly applies to people setting out in business. If they are to make a successful start to their entrepreneurial life, many questions need to be clarified and decisions prepared: How do I make a business plan? How can I make a reality of my business idea? And where can I get hold of my initial capital?

The Economic Affairs Ministry’s start-up website offers a host of information, e-training courses, checklists and overviews, as well as listing people to talk to about starting out in business.

There is a wide-ranging network of support services, initiatives and advisory services for entrepreneurs, such as:

  • chambers of industry and commerce (Industrie- und Handelskammern – IHK) and chambers of skilled crafts (Handwerkkammern – HWK)
  • local or regional agencies or business promotion companies
  • innovation, technology and business-incubation centres
  • employment agencies
  • professors of entrepreneurship / entrepreneur networks
  • start-up trade fairs
  • nation-wide, regional and local start-up initiatives and
  • business-plan competitions

New digital start-up platform from March 2018

Further to this, the Economic Affairs Ministry and the KfW launched the pilot phase for a new, digital start-up platform in mid-December 2017. From March 2018, prospective entrepreneurs will be able to get a wide range of interactive, customised and free help at

The idea is that people wanting to start up a business should be able to handle all the preparations relating to the launch on a central platform, and to get individual advice – from the initial idea via the development of the business model and the business plan through to the appropriate assistance and financing. The goal is to make it easier to set up businesses in Germany. To achieve this, the platform offers a range of digital tools and includes all the key players in Germany providing advice and funding to start-ups. More than 35 partners from Länder promotional banks, chambers, guarantee banks, Sparkassen, Volks- und Raiffeisenbanken and private banks are already on board.

“Young Digital Economy” Advisory Board

The “Young Digital Economy” Advisory Board gives the Federal Minister for Economic Affairs and Energy first-hand advice on current issues of the information and communication industry, and particularly on the development and potential of the young digital economy, on new digital technologies, and on how to provide start-ups with a better environment in which to grow. In view of the dynamic nature of the digital economy, it is flexible and open and offers the German start-up scene a direct and practical dialogue with policy-makers.

Warehouse, image regarding the subject of SME financing; Quelle: Getty Images/Erik Isakson

© Getty Images/Erik Isakson

Hand-over of Businesses to the Next Generation

Making the hand-over work

Successful hand-overs of companies not only safeguard jobs, but also keep expertise in Germany. To encourage business people to start working at an early stage on the question of handing the company on to the next generation, the Economic Affairs Ministry has launched the “nexxt” initiative.

In Germany, an average of 27,000 companies a year need to find someone to take them over. In this transitional period, approximately 400,000 jobs are at risk due to the forthcoming hand-overs. For this reason, the Economic Affairs Ministry wants to make entrepreneurs and potential successors even more aware of the issue.

According to the successors, more than 80% of the family-owned companies handed over in recent years prepared the transfer well. But more than a third of the owners had difficulties finding a suitable successor. Demographic change and the skills shortage were factors here, as were the prospects for potential successors. This means that it is particularly important for company owners to sort out the hand-over at an early stage, so that traditional family businesses can continue to thrive in Germany with their jobs and their expertise.

nexxt business succession initiative

Back in the year 2000, the Economic Affairs Ministry started to address the issue of company hand-overs, and launched the “nexxt” initiative in order to raise awareness of the issue amongst entrepreneurs. The “nexxt-change” match-making site (in German) is at the heart of the initiative: people seeking a successor can make contact with people seeking a company via the free online exchange. Nationwide, more than 800 regional partners – chambers, savings banks and credit unions – work to assist both owners and potential successors of companies placing the advertisements.

Further information

Further information

  • 16/10/2017 - Press release - Funding of SMEs

    Press release: Zypries: “The start-up community in Germany is well on track”

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Wall with post-its from an Start-Up; Quelle: Getty Images/Emely