Entrepreneurial activities have been shifting to the younger age groups over the last seven years in Germany.
TEA – Total Early Stage Entrepreneurial Activity – is the percentage of the 18-64 population who are either a nascent entrepreneur or owner-manager of a new business. In 2023, the TEA rate was 11% for 18-24 year-olds and 13.2% 25-34 year-olds. Hence, they are well above the average for all of all 18-64 year-olds. By contrast, the TEA rate for 55-64 year-olds was only 3%. This means that the entrepreneurial rate of the youngest age group was almost four times as high as that of the oldest age group.
These are among the findings from the GEM 2023/2024 Germany National Report, authored by Rolf Sternberg, Natalia Gorynia-Pfeffer, Florian Täube, Nils Wendt, Armin Baharian and Matthias Wallisch.
The report describes the activities and perceptions about entrepreneurship in Germany in 2023. It compares the findings from Germany with 45 other GEM-participating countries and with data of Germany from previous years. Responses come from 2,633 randomly selected individuals of a representative survey and 78 entrepreneurship experts in Germany. Both groups were surveyed between June and August of 2023.
Other Key Findings
Among the takeaways from the research are the following:
1. The TEA rate is at its second highest level!
TEA fell from 9.1% (2022) to 7.7% (2023), which is its second-highest level ever, since 1999, the starting year of the GEM surveys. The TEA rate covers both people who are preparing to start a business at the time of the survey but whose formal implementation has not yet taken place (nascent entrepreneurs) and people who have started their own business or founded a company in the last three and a half years (young entrepreneurs).
2. The TEA rate gender gap still remains in Germany.
Since the first GEM Global Report in 1999, women's entrepreneurial activity has been below that of men. This is also true in 2023: women (5.9%) started companies significantly less often than men (9.3%). In 2023, the proportion of women among founders is 38% compared to 62% for men.
3. Start-up activities are primarily in the retail sector.
In 2023, almost 25% of the founders were in the retail sector with their entrepreneurial activities. In addition, more than 10% are active in the “scientific and technical activities” segment, which includes, for example, business and technology-oriented management consulting. More than 10% of the founders are also active in the “information and communication” sector. This includes, among other things, the areas of programming and data processing. This is followed by the “accommodation and catering industry” with over 9% of founders.
4. Just under 10% of the founders expect strong job growth for their own company.
In 2023, 10% of all founders expect creating six or more jobs in the next five years; a moderate increase compared to the previous years. Around 20% of founders expect one to five jobs. In contrast, around half of the founders do not expect to create any jobs in the next five years. In the previous year, this figure was well over 60%, partly due to an uncertain economic environment at the time of the survey.
5. Many don’t see entrepreneurial opportunities; a high fear of failure persists.
In 2023, a quarter of respondents said that in the next six months, in the region in which they live, good opportunities for setting up a business exist, a similar level to the past three years. Before the pandemic, the 2019 figure was 38%. The assessment has been similar in recent years: in 2020, more than 30% of respondents still saw starting a business as a simple process, but in 2023 this figure is only 25%. Since 2020, the fear of failing to start a business has become widespread. In 2020 38.5% of the working population cited fear of failure as an obstacle, while in 2023 45.1% of respondents were of this opinion.
6. Financial support for start-ups from private individuals is declining.
Approximately 5% of all respondents stated that they had financially supported a company in its start-up phase over the last three years. A large proportion of these investments were made for people from their close circle of friends (family, neighbors, colleagues). Overall, in seven out of ten cases, the money provided from private sources is less than €10,000. This means that it is certainly a valuable start-up aid, but is rarely to be seen as a large investment. One in twenty people who offer financial support (around 5%) invests €50,000 or more. This represents a significant decrease compared to the previous year, when the proportion of this investment amount was 15%.
7. Environmental aspects play a major role in companies’ orientation.
More than seven out of ten people who have founded a company in the last 3.5 years or who have been active as entrepreneurs on the market say that they take environmental aspects into account when developing their company: as part of the company strategy, in the products and services offered or in the design of the supply chain. New founders are about twice as likely as established entrepreneurs to say that taking environmental aspects into account has a positive effect on the number of customers (62.1% to 36.7%), sales (60.6% to 28.6%) and profits (48.5% to 23.9%). The respondents see the three biggest obstacles to taking environmental aspects into account are customers' willingness to pay for sustainable offers, lack of financial resources and limited technical options for their companies.
GEM Impact in Germany
This marks the 24th GEM Germany National Report. Earlier this year, the team was recognized with a Gold Award at the GEM Silver Anniversary Awards event for 24 years of consecutive years of GEM participation. After many years leading GEM Germany, Rolf Sternberg has decided to turn over leadership to Christian Hundt and Florian Täube
Germany has a close collaboration with the Germany Ministry of Economic Affairs and many policymakers, including the Secretary of State for Start-Up Affairs, have used GEM data to inform decision-making.
The GEM Germany report generates a plethora of media attention. This year, the report was covered in the likes of WirtschaftsWoche, Tagesschau, Börsenzeitung, Frankfurter Allgemeine Zeitung and Süddeutsche Zeitung. You can access complete coverage at this link.
The lead institution is Leibniz Universität Hannover - RKW Kompetenzzentrum. The main funder is RKW Kompetenzzentrum.