ZEW Study - Again Decreasing Number of High-Tech Start-Ups in Germany

In 2010 the number of high-tech start-ups in Germany fell by two per cent. This is a result of a recent study of the Centre for European Economic Research (ZEW) conducted in cooperation with Microsoft Germany. The surge in growth in 2009, which was caused by the Unternehmergesellschaft (UG – a limited liability company with less restrictive entry costs) did not continue. In the last year 14100 high-tech start-ups were set up. This number is significantly lower than the numbers of the second half of the 1990s, where on average approximately 18500 start-ups per year were established.

Since the end of 2008, especially the reform of the German GmbH (Private limited company), together with the introduction of the Unternehmergesellschaft (UG) caused a significant increase of new business foundations in the high-tech sector. Besides, the fear for unemployment during the crisis pushed many employees towards self-employment to ensure their living at that time. In 2010, the new legal form has been used by as many founders as during the previous year, but this did not lead to a further increase in start-up activity. On the contrary, the start-up activity followed its long-term trend and decreased again by 2 per cent. “The introduction of a new legal form has shown that specific measures to lower the costs and the risks for establishing a business have positive effects on the start-up activity. But a sustained increase in the number of high-tech business foundations has not achieved. The number of high-tech start-ups in Germany is still developing slowly”, says Dr. Bettina Müller, expert for start-ups at the research department “Industrial Economics and International Management” of the Centre for European Economic Research (ZEW).

Software sector is growing dynamically

Among the different branches of the high-tech sector, the software sector develops positive (+ 2 per cent) in particular and contrasts noticeably with the IT-service sector (-4 per cent). “This is because of the development potential that new technologies and services offer to the software sector ”, says Ralph Haupter, chairman of the management of Microsoft Germany, whose company is involved in the high-tech sector support programme “unternimm was.” and BizSpark. “We are living in an exciting moment for potential IT start-ups: cloud computing, mobile communication or app development, the IT sector has an enormously dynamic growth that will only reveal completely in the following years. According to the Centre for Economic and Business Research (CEBR) in London, there will be 820000 new IT-jobs in Germany until 2015.”

“Within the manufacturing branches of the high-tech sector, only the high-grade technology, such as medical and vehicle technology, could record a slight upswing (+1.3 per cent). Compared to cutting-edge technology sectors, such as biotechnology, in which high-tech start-ups often can only establish with high initial investments, the entry to the software market is easier. The start-up activity in cutting-edge technologies decreased by 3.5 per cent in 2010. This underlines that the stimulation of such high-tech start-ups requires further political measures.

Cloud computing as a chance

High-tech start-ups can give a special impulse to the whole economy. According to the ZEW, business founders in high-tech manufacturing employ on average twice as many employees during the first five years as founders from other industries. “It is important to provide special support to high-tech start-ups in Germany. Amongst the financial support by venture capital investors and business angels, it is essential to improve the required technological framework for start-ups: Cloud computing gives IT companies and start-ups the chance to rapidly leave the investment stage and enter the profit zone. Not only the founders’ benefits concerning cost reduction and efficiency, but also the provision of cloud services to the end client, today open new markets to the companies. The cloud can make start-ups successful”, says Haupter.

In Germany, Microsoft supports about 1200 young enterprises with technology know-how and offers free access to the Windows cloud-service Azure and costumer and partner networks: “Support programmes such as the high-tech founders’ initiative “unternimm was.” and Mircosoft’s BizSpark are really important for us”, confirms Boje Holtz, CEO of MobileBits, which is supported by Microsoft. “Thanks to the cloud application Windows Azure, we could access existing and well developed infrastructure and IT systems and adjust them to our rapidly growing company. Especially our own product, which helps software and app developers as a software-as-a-service offer to provide new innovations in Germany, benefits from cloud computing”. Mobile Bits has developed a new platform on the basis of Microsoft Azure, with which software programmers can write smartphone games for different operating systems at the same time.

Downloads

Executive Summary (German PDF-File, 124 KB)

Press Conference Presentation (German PDF-File, 444 KB)

Method Description (German PDF-File, 140 KB)

For further information please contact

Dr. Bettina Müller, Phone +49 621 1235-352, E-mail bettina.mueller@zew.de

Daniel Höwer, Phone +49 621 1235-187, E-mail hoewer@zew.de