Lessons on supporting women entrepreneurs, from the German ecosystem

Women-led businesses in Germany drive medical innovations and the digitization of the education system and tend to pursue societal goals (vs. many of their male counterparts who are more likely to be motivated by economic interests). They are determined to bring their visions to market, break down barriers, and will ultimately turn Germany into the female founders nation it ought to be.

In order to support startups, we have to support women founders: this is the undeniable conclusion of the 2021 “Germany: Female Founders Nation?” report, which Google for Startups has published in partnership with the Handelsblatt Research Institute. The report provides a comprehensive analysis of the female entrepreneurship landscape in Germany and holds lessons global startup ecosystems can learn from.

Here are the top 5 findings that provide insights on what the current status of Germany’s female founding ecosystem looks like, as well as deeper perspectives on prevailing challenges:

When it comes to female entrepreneurship — Germany still has a way to go.

The report showed an overall share of women-founded businesses at 36 percent in 2020 (yoy trend: decreasing) and female founders share of only 16 percent (yoy trend: stagnant). There’s still a lot of room for improvement to achieve balance and equal representation.

The female entrepreneurship landscape is diverse.

Women are bold chance-takers who apply their expertise across sectors, come from all walks of life and start companies in various challenging life situations. The report identifies 6 primary female founder archetypes:

1. The transformational knowledge carrier pushes digitization in her specialist area; she is between 20–39, educated and keen to find fulfilment.
2. The experienced part-time experimenter starts her business while still in full-time work. 40–49, she has gained extensive professional experience, often starting off with little capital (< 5,000 euros).
3. The young master craftsman is 20–29, trained in her craft for her independent business during her apprenticeship, is 20–29 and is the ultimate transferee of a craft.
4. The out-of-necessity inventor starts her company as a result of unemployment, usually inspired by an existing startup idea; she is between 30 and 39 years old and finances her vision with her own money.
5. The new-space-creating pioneer starts her business in a special life situation — usually during or after parental leave. She is between 30 and 39 years old, and holds a university degree.
6. The experienced self-made maker is between 50 and 59 years old and benefits from her large repertoire of experience and knowledge; she is likely to start her business in the education space.

Reasons for starting a business are also diverse. The highest-ranked motivation for women starting their own companies is fulfillment in work (84%), followed by freedom of more flexible work hours (67%), being her own boss (57%), and being inspired by a strong business idea (40%). Women founders are more likely to found again in the future (78%) than men (71%).

Most female entrepreneurs bootstrap or fundraise from their immediate network. Family and friends (48%) is the largest funding source, followed by public organisations and corporates (35%), professional networks (30%), state-backed financial support (29%), and mentoring programs (9%). This aligns with key sources for seed capital: a large majority bootstrap (90%) or raises from family & friends (21.3%), while only a few leverage state funding (9%) and other external sources.

There are still many obstacles for women founders. While these vary according to life situation, age, and other factors (e.g. for founders with young children, the problem of combining family and work is front of mind), the top hurdles are bureaucracy (59%), taxation (51%), inadequate access to capital (50%), fear of failure (34%), and lack of network (27%) and role models (26%).

The report concludes that, ultimately, a socio-economic paradigm shift is required to drive long-term change and to increase the share of women founders–such changes include more accessible childcare and encouraging women in STEM.

We can start by giving more visibility to women entrepreneurs in order to inspire future founders. To see these role models, read the report (in German only) and the stories about the incredible women founders in the Google for Startups network.