German Startup Monitor 2020 - Key Takeaways
The 8th German Startup Monitor was released yesterday, including the feedback of 1,946 local startups, making it the most comprehensive study on the startup ecosystem in Germany. The aim of the study is to make startups visible to the public and to make their concerns heard. Let's check the results because those are very important takeaways to all stakeholders that read our page.
The Corona crisis is hitting the German startup landscape hard: 75 percent of startups see their business activities being impaired. Nonetheless, the founders are more optimistic than the established economy. You plan to take on an average of six new employees in the next twelve months — despite the current difficult environment. These are the results of the 8th German Startup Monitor (DSM), which the Bundesverband Deutsche Startups e. V. and the auditing and consulting company PwC in cooperation with the University of Duisburg-Essen. Almost 2,000 German startups took part in the survey for the study.
“Like the entire economy, startups are affected by the corona pandemic. But founders usually see an opportunity in the crisis and are used to reacting quickly to new situations. That is why they are more optimistic about the future than the German economy as a whole, “comments Franziska Teubert , Managing Director of the Bundesverband Deutsche Startups e. V. 90 percent of those questioned responded to the crisis with specific countermeasures. So far, only a few want to cut staff in order to save costs.
New hires instead of downsizing
Florian Nöll , head of the NextLevel startup initiative at PwC Germany, sees clear parallels with family businesses in this approach: “During the crisis, startup decision-makers show an attitude that is very similar to that of family entrepreneurs: They concentrate on theirs Strengthen and rely on sustainable action instead of downsizing. In doing so, they not only create jobs, but also become the engine of growth to lead the economy out of the crisis. “
The focus is on innovation and sustainability.
Many founders rely on innovation and sustainability. The use of artificial intelligence in the startup ecosystem is on the rise. 43 percent of the companies surveyed confirm that the key technology has a clear influence on their business model. At the same time, environmental and social motives are playing an increasingly important role in startups: 43 percent of startups now assign their products and services to the green economy. That is around 7 percentage points more than in the previous year. This means that startups play a key role when it comes to innovative solutions for the big questions about climate and sustainability.
Two out of ten founders have a migration background
“Just like indestructible optimism and the desire to make a contribution to environmental and climate protection, diversity is also firmly anchored in the identity of many start-ups. The commitment to diversity forms an important part of the mosaic for the success of the startup ecosystem, ” says Prof. Dr. Tobias Kollmann from the University of Duisburg-Essen convinced.
This year, the Startup Monitor examines the aspects of diversity, internationality and immigration in detail for the first time: Two out of ten founders have a migration background, with the proportion in Rhine-Ruhr and Berlin being particularly high at around 30 and 25 percent respectively. Diversity is also a top priority among employees: 27 percent have their roots outside Germany. In Berlin startups, 43 percent of the workforce comes from abroad.
Challenges in the crisis: customer acquisition, capital procurement and cash flow
The founders, however, have to nibble on a number of tasks: 68 percent of those surveyed describe sales and customer acquisition as the greatest challenge. That is 13 percentage points more than in 2019, which indicates the reluctance to spend and invest on the part of consumers and companies during the crisis.
The survey results also show the difficult financial framework conditions: 43 percent consider raising capital to be challenging, which indicates the tense situation on the capital market (2019: 38 percent). At 32 percent, significantly more founders rate liquidity as a current difficulty (2019: 18 percent).
Six KEY facts about German startups 🥨
The proportion of women is stagnating: The proportion of female founders has only increased slightly compared to the previous year — from 15.7 to 15.9 percent.
Working language English: English is spoken in 30 percent of startups. In Berlin, this even applies to 63 percent of startups.
High level of satisfaction with the environment: 61 percent of the founders rate the startup ecosystem at their location as (very) good.
Progress in financing: The proportion of entrepreneurs who resort to external financing has risen to 63 percent (previous year: 55 percent).
Startups are pushing abroad: Two out of three startup decision-makers are planning (further) internationalization despite the crisis.
Cooperations are increasing: almost three-quarters of the startups (72 percent) are now working with established companies.
