In Germany, entrepreneurs have so far been little deterred by the corona pandemic.
(Photo: IMAGO/Westend61)
Berlin In the two Corona years 2020 and 2021, there were more company start-ups than company closures. This is shown by the start-up panel of the Leibniz Center for European Economic Research (ZEW) and the Institute for Labor Market and Vocational Research (IAB), which is available to the Handelsblatt.
Apparently, the rich economic aid from the state, the short-time working rules and the temporary suspension of the obligation to file for insolvency have not only prevented a mass death of companies. They have even allowed the total number of companies to increase somewhat and now stand at around 3.4 million.
The two survey waves that the two institutes conducted in 2020 due to the special situation for the start-up panel show that in spring 2020 almost 70 percent of the companies founded between 2016 and 2019 were negatively affected by the pandemic. In autumn 2020 it was still a good half. By May 2020, around 60 percent of the young companies still on the market had already applied for state aid.
At the same time, the analyzes show that the emergency aid apparently could not prevent companies in need from being closed. The authors draw this conclusion from the comparison of companies that were both negatively affected by the crisis and applied for emergency aid with companies to which neither of these applied. After that, the first group had a slightly lower probability of survival.
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The IAB/ZEW start-up panel follows the development of newly founded companies over several years – also to advise politicians on the conception of support measures. For this purpose, 6,000 companies are normally surveyed once a year.
However, the corona pandemic also showed that young companies – i.e. no more than four years old – reacted in a particularly adaptable manner. They adjusted to the new situation, and the proportion of those who introduced new procedures even increased compared to the situation before Corona.
The authors found a particularly large number of innovative processes among non-technology-oriented service providers, such as e-commerce companies, delivery services, pick-up service companies, but also in the field of online consulting. Overall, the continued innovation efforts would have helped the young companies to secure their existence even in the crisis.
Even working from home has not slowed down innovation
It is interesting that even the sometimes necessary large-scale work in the home office “did not damage the innovative activity of young companies on average”, the authors note. On the contrary: the plus in working from home “apparently correlates positively with the innovation process”. In any case, it was used more frequently by innovative companies than by non-innovative ones.
On average, according to the surveys for the panel, every tenth young company introduced a new product in the crisis year 2020 – that was even three percentage points more than in older companies.
This means that “young companies can not only keep up with the established ones, but also have the potential to outperform them and thus strengthen competition in their respective sectors,” ZEW innovation researcher Sandra Gottschalk told the Handelsblatt.
It is striking that every fourth young company put a process innovation on record – in 2018 it was only 20 percent. The authors assume that the corona crisis “made these innovations necessary”, according to Gottschalk.
Overall, the number of new companies in 2020 fell only slightly compared to the previous year and even rose again in 2021. There were clear winners and losers: Unsurprisingly, in 2020 start-up activity in the hospitality and tourism sectors fell the most, at 25 percent compared to 2019.
In contrast, the chemical industry recorded an increase of almost 16 percent. In the software and games sector, start-ups even increased by 31 percent.
In 2021 at least, the momentum among start-ups, i.e. the particularly innovative and mostly digital start-ups with growth opportunities, was even more positive. These account for around three percent of all start-ups. According to data from the analysis company Startupdetector based on the commercial register, 3,348 such new start-ups were registered last year – eleven percent more than in 2020.
After a slump at the beginning of the pandemic, according to the information, more than 800 start-ups were founded every quarter in 2021, the number of financings rose and was 671 in the fourth quarter. In addition to Berlin, locations with strong universities such as Heidelberg and Karlsruhe are proving to be the best places to start -up hotspots.
More: After a ten-month break, the federal government has restarted the important “Central Innovation Program for SMEs” – albeit with strict specifications