KfW Research: Business founders in Germany are younger than ever

• Average age of start-up entrepreneurs is 34.4 years
• Number of newly founded businesses rose slightly in 2024
• Positive signals for entrepreneurial activity this year

In 2024, business founders in Germany on average were younger than ever since surveys of the KfW Entrepreneurship Monitor began. Their average age was 34.4 years, down from 37 to 38 years at the start of the millennium. Overall, 39 per cent of business founders last year were 18 to 29 years old, the largest share of this age cohort ever recorded. The long-term trend, however, shows that the rejuvenation is mainly attributable to an above-average decline in the number of founders aged 40 to 49. In 2024, they still accounted for 16 per cent of business founders, while 50 to 65-year-olds made up only 12 per cent, the lowest rate of “silver entrepreneurs” ever measured. In 2023, these two age cohorts still represented 19 and 15 per cent of business founders.

These are among the findings of the Entrepreneurship Monitor which KfW Research presented at a press briefing on Tuesday. In 2024, 50,000 representative telephone interviews and, for the first time, an additional 10,000 online interviews were conducted for the KfW Entrepreneurship Monitor. The term business founder is defined broadly to include individuals that have become self-employed on a full-time or part-time basis as freelancers or business owners or by founding, participating in or taking over a business.

One positive finding was that slightly more people ventured into self-employment again in 2024 than the year before. The number of newly founded businesses grew by 17,000 or 3 per cent to 585,000. The cooling labour market has helped more people to become their own bosses. The moderately positive growth of start-up activity was due to an increase in businesses founded on a part-time basis, which grew by 5 per cent or 19,000 to 382,000. The number of new full-time entrepreneurs was 203,000, down slightly by 1 per cent or 2,000 people from the previous year.

The moderately positive overall development does not obscure the fact that the situation remains difficult. Since the beginning of the millennium, entrepreneurial activity has slowed significantly and remained in a sideways trend since 2018.

“The entrepreneurial drive in Germany is weak. In the past years, surely this was also due to the good performance of the economy as people preferred the stability of salaried employment. That is a question of mentality. But it is also about education,”

said Dr Dirk Schumacher, Chief Economist of KfW.

“People who are more confident around financial topics makes them more likely to be entrepreneurs. It is therefore positive that the new government has added entrepreneurship education as a goal for educational quality and teacher training in its coalition agreement.”

A silver lining is that the entrepreneurial preference of younger people is relatively high, as 36 per cent of 18 to 29-year-olds have stated that they would prefer to be self-employed than employees. What is also cause for optimism is that the rate of start-up planners has recovered after dropping to a record low in 2023, with 4,9 per cent of the population pursuing start-up plans (previous year: 3.6 per cent).

“We expect entrepreneurship rates to rise moderately in 2025,”

said Dr Dirk Schumacher.

Other key findings of the KfW Entrepreneurship Monitor:

Cessation rate: Around one third of business founders close their business again within three financial years. After a further two years, some 61 per cent of new businesses are still trading.

Capital invested: Start-ups are becoming more capital-intensive. In the past years, they typically invested less than EUR 5,000. In the long-term average, this amount was sufficient for a good two thirds (67 per cent) of business founders. Since 2022, however, that has changed at a structural level. In 2024, only 56 per cent of founders invested up to EUR 5,000. This was likely due primarily to the general price increase.

Funding: In 2024, the share of founders who met their capital requirements exclusively with own funds was 75 per cent. That was the highest level ever recorded.

Type of establishment: In 2024, the share of businesses founded from the ground up was 83 per cent. Only 10 per cent were takeovers of existing businesses and 7 per cent were participations. Since the mid-2000s, the share of takeovers and participations has trended downward, even if it grew marginally last year. “The business succession gap is massive. It would therefore be desirable if more people decided to take over existing enterprises,” said Dr Dirk Schumacher.

Digitalisation: Last year, 36 per cent of newly founded businesses were online-based. That means customers must use digital technologies to be able to use their products and services. That was the highest level recorded to date.

Jobs: In 2024, newly founded businesses created 485,000 full-time equivalent jobs.

Female business founders: The share of female entrepreneurs in 2024 was 36 per cent. It typically oscillates around its long-term average of 39 per cent. While only 17 per cent of male entrepreneurs seek short-term or temporary self-employment, that figure is 28 per cent for female entrepreneurs.

The full KfW Entrepreneurship Monitor can be downloaded from KfW Entrepreneurship Monitor | KfW.