KfW Research: 27% of business founders in Germany see their undertakings as a start-up

• That share drops sharply when the generally accepted definitions of “start-up” are applied
• The term “start-up” is being used increasingly loosely by the public
• Greatly increased media attention may be a factor

In Germany, 27% of founders refer to their business as a start-up. That is significantly more than the common definitions of start-ups would suggest. The KfW Entrepreneurship Monitor, for example, puts the share of newly founded businesses with start-up characteristics at 6%, and other data sources also count start-ups in the single-digit percentage range.

According to a new analysis by KfW Research, 28% of individuals who became entrepreneurs by taking over an existing business regard it as a start-up. However, only newly founded businesses are typically counted as a start-up.

Furthermore, 16% of freelancers and 23% of sole traders claim that they are heading a start-up. Usually, these are not considered to be start-ups either. To be sure, there is no official definition of a start-up. From an industry-specific and economic-policy perspective, however, it is understood to be an innovative, growth-oriented young enterprise.

“Usage of the term start-up has evolved in the past ten years. It is now being used more broadly and with less specificity”,

said Dr Georg Metzger, economist at KfW Research.

“That may be associated with the heightened media attention being given to start-ups, so that people may have become somewhat more used to hearing the term.”

Before 2010, the words “start-up” or “start-ups” occurred in the press 2,000 to 3,000 times a year, and more often in trade publications than in popular press. The trend gathered steam from 2010, particularly in the daily and weekly press. The terms “start-up” or “start-ups” were used almost 30,000 times in 2019.

The study can be downloaded from Focus on Economics | KfW.