Younger Generations Driving the Entrepreneurial Boom in Germany
Younger entrepreneurs on the rise in Germany - Younger individuals are increasingly venturing into entrepreneurship in Germany.
In the midst of the economic crisis, Germany is seeing an increase in self-employment. According to a study by KfW Bank Group, the nation's state-owned development bank, the number of business start-ups skyrocketed by 17,000 or 3%, reaching 585,000 in 2024 [@kfw_2024]. This surge in entrepreneurship is partly due to the cooling job market, which has encouraged more people to take the plunge into self-employment.
An interesting observation is that founders are, on average, younger than ever before at 34.4 years old [@kfw_2024]. This marks the lowest average age since the beginning of the millennium, when it was typically around 37 to 38 years. Interestingly enough, 39% of founders in 2024 were between 18 and 29 years old, shattering previous records for this age group [@kfw_2024]. Young people are becoming increasingly open to the idea of self-employment, while the percentage of older founders is dwindling.
Incorporating data from KfW Bank Group's Entrepreneurship Monitor, we can attribute the younger age of entrepreneurs to factors such as increased access to digital tools, a cultural shift towards entrepreneurship, a supportive ecosystem, technological innovation, and project-based learning approaches [@kfw_em].
Younger generations have greater access to digital technologies, online business models, and entrepreneurship education, lowering barriers to entry and allowing for earlier business initiation [@kfw_em]. This cultural shift towards entrepreneurship is evident as startups are increasingly viewed as a viable career path, especially among young people [@kfw_em].
The supportive ecosystem includes initiatives by the German government, promotional banks like KfW, and private investors, offering easier access to financing, mentorship, and networking opportunities [@kfw_em]. These improvements have also helped create new, youth-friendly startups within tech-focused sectors such as digital services, fintech, and e-commerce [@kfw_em].
Educational institutions in Germany place emphasis on project-based and active learning, fostering entrepreneurial skills and attitudes in younger students [@kfw_em]. These skills enable them to identify and exploit business opportunities at an earlier age and set the stage for a successful entrepreneurial career.
"The past years' good economy has likely played a role, as people chose the security of an employee relationship," says Dirk Schumacher, KfW's Chief Economist [@kfw_2024]. "That's a matter of mindset." Despite the increase in start-ups, the inclination to start a business in Germany is still low, with many people deterred by bureaucratic hurdles and financial risk. In the beginning of the millennium, there were almost 1.5 million start-ups, but the number then collapsed and has since been stagnating [@kfw_2024].
According to Schumacher, "The new government's intention to promote entrepreneurial skills in schools is positive as it will lead to increased confidence in financial matters and make starting a business more appealing" [@kfw_2024].
In conclusion, the combination of improved digital access, a supportive entrepreneurship ecosystem, cultural shifts, and innovative educational methods are primary drivers behind the decrease in the average age of entrepreneurs in Germany, as evident in the findings of the KfW Bank Group [@kfw_em].
References:
[@kfw_2024]: KfW Financial Group, "KfW-Studie: Mehrneunftausend Unternehmensgründungen in Deutschland - und sie sind jünger als je zuvor" (2024). Link
[@kfw_em]: KfW Bank Group, "KfW Entrepreneurship Monitor (2019): Mix of Opportunities and Challenges" (2019). Link
[@kfw_2020]: KfW Financial Group, "KfW Bank Group Factsheet – Key Figures 2020" (2020). Link
EC countries could consider adopting Germany's educational approach, fostering project-based learning to promote vocational training and entrepreneurship among younger generations. This may help reduce the financial risk and bureaucratic hurdles associated with starting small-businesses, encouraging more people to pursue careers in entrepreneurship.
Greater emphasis on vocational training and entrepreneurship education in schools has the potential to create a skilled workforce well-equipped to establish and manage small-businesses, particularly in tech-focused sectors like digital services, fintech, and e-commerce.
Investment in vocational training and entrepreneurship initiatives can provide finance and resources for young entrepreneurs, allowing them to tap into emerging opportunities while building a solid foundation for their careers and contributing to the growth of their local economies.
