Startups in Germany - a spirit of optimism and more jobs

This positive development is also reflected in the labor market: the average number of employees has risen from 14 to 18 and the trend for planned new hires is also pointing upwards. However, the search for talent is becoming one of the biggest hurdles for young entrepreneurs, alongside raising capital. Another major challenge is the lack of access to data and its concentration in a small number of international corporations. These are the findings of the 9th German Startup Monitor (DSM), which was compiled by the German Startups Association and PwC in collaboration with the University of Duisburg-Essen and in which over 2,000 German startups participated for the first time.

Strengthening dynamism and diversity

Start-ups are a driving force when it comes to innovation and technology and are thus also creating more and more new jobs: In the coming months, the companies surveyed plan to recruit an average of nine employees. However, whether the planned new hires can be realized depends largely on the situation on the recruitment market. One thing is certain: Recruiting is becoming more difficult. 27% of startup founders already describe it as the biggest hurdle - that is 10 percentage points more than in the previous year. Another key aspect in the context of growth and personnel relates to diversity - more women as founders means drawing on the full potential in terms of talent and innovative strength. Against this backdrop, the 11% increase in the proportion of women is a positive signal and a first step in the right direction - even if the overall level is still very low at just under 18%. The proportion of founders with a migration background has also increased compared to the previous year (20%) and now stands at 22%. "The pandemic has ruthlessly exposed Germany's deficits in digitalization. Startups offer solutions here and are a driver of innovation for the entire economy.

The study shows that our startup ecosystem is on the right track in terms of growth and diversity - but: with a view to international competition, things need to move much faster in both areas," comments Franziska Teubert, Managing Director of the German Startups Association, on this development.

Venture capital and strategic investors wanted

In addition to recruiting personnel, the founders face further hurdles, particularly in the areas of sales and customer acquisition, product development and capital procurement. However, the latter has developed positively: In the current survey, only 36% still cite fundraising as a stumbling block, compared to 43% in the previous year. Respondents also rate access to capital and investments much more positively than in 2020: 38% of respondents are satisfied with this, compared to just 30% in the previous year. The reason: the pandemic-related uncertainties regarding financing have calmed down and start-ups have raised significantly more external capital again in recent months.

However, there is still a large discrepancy between the desire and reality of financing when it comes to venture capital: only 20% of start-ups finance themselves in this way, but 42% would like to. The gap is even wider when it comes to financing from strategic investors: 43% of those surveyed would like to access this, but only 15% actually do.

Corporate venture capital brings capital and know-how

"Unfortunately, investors and established companies are very slow to realize that they can benefit greatly from strategic investments in and collaborations with innovative startups. Established companies in particular are dependent on new technologies and innovative business ideas - and this is precisely what startups can often develop much more quickly and easily," comments Florian Nöll, Head of Corporate Development & Innovation at PwC Germany. In any case, start-ups are open to working with corporates: Almost half of founders seeking venture capital funding would like it to come from a company. They not only hope to receive capital from this corporate venture capital (CVC), but also pursue strategic goals such as access to sales channels and industry expertise.

More open data initiatives wanted

When it comes to data procurement, the scene has one demand of business and politics alike: only 38% of the companies surveyed stated that they have sufficient access to relevant data. 53% would like to see more openness from the established economy and 74% call for more open data initiatives from the state. At 67%, a clear majority of founders also see a competitive disadvantage due to the concentration of data in the hands of a few international corporations. Universities strengthen the start-up ecosystem Last but not least, it is primarily universities and research institutions that strengthen the young business ecosystem at the start of a start-up.

Entrepreneurs particularly value the proximity to universities when it comes to location factors: 76% rate this aspect as good. The fact that the startup scene is closely linked to academic research is confirmed by three further results of the study: 55% of startups cooperate with scientific institutions; one in four startups originates from universities and research institutions and 36% of founders met their co-founders at university. "Universities and research institutions are important places where innovative companies are created. However, they need to incorporate the training and support of student founders much more strongly into their DNA and make this a primary task alongside pure research," says Prof. Dr. Tobias Kollmann from the University of Duisburg-Essen. "This includes incorporating entrepreneurship earlier and more specifically into their study programs and allowing the writing of a business plan as a final thesis in order to enable a seamless transition for a spin-off."