Migrant start-ups support entrepreneurial activity in Germany

• Migrants accounted for one in four start-ups in 2019
• The labour market, a willingness to take risks and role models are the three main drivers
• Coronavirus crisis is both risk and opportunity for start-ups

Start-ups by migrants are again playing a more important role for entrepreneurship in Germany. In 2019, their share in newly founded businesses grew by a notable five percentage points to 26% on the previous year. This is the finding of a special analysis conducted by KfW Research as part of the KfW Entrepreneurship Monitor. Fewer opportunities in the labour market, a higher willingness to take risks and the stronger effect of role models give migrants more entrepreneurial motivation than the general population. Early results show that migrant start-ups are more innovative and more growth-oriented. Migrants are understood to be persons who do not have or were not born with German citizenship.

Among migrants the entrepreneur rate, the number of business founders per 10,000 employable persons, is 137. The rate converged on the average until 2017 but has since increased again. Recently the entrepreneur rate for the overall population was just 117 by comparison. Accordingly, 160,000 of the 605,000 start-ups of the year 2019 were created by migrants.

“Start-ups are important for an economy’s innovative capacity and, thus, for its sustainability. That means Germany has for many years benefited from migrants’ increased willingness to become entrepreneurs. That proved to be true again in 2019. Even if lower employment opportunities play a role more often in the decision to start a business, migrants’ innovative spirit and growth orientation offer great possibilities”, said Dr Fritzi Köhler-Geib, Chief Economist of KfW. “This year is a particular challenge for entrepreneurs because of the coronavirus crisis. Many start-up plans were put off temporarily. But the crisis can also act as a catalyst for innovation. Entrepreneurs who meet the new needs with innovative business ideas can be the great winners of tomorrow.”

The current analysis by KfW Research on migrant start-ups can be retrieved from https://www.kfw.de/KfW-Konzern/Service/Download-Center/Konzernthesearch/Volkswirtschaft-Kompakt/men/Re