The European Startup Monitor (EMS) 2016 has just been published and aims to provide a comprehensive overview of our continent's startup scene. While the second ESM was able to significantly expand its database, surveying approximately 2,500 startups and more than 6,300 founders with over 23,700 employees from 18 countries, with 1,224 startups surveyed, almost half of all startups surveyed in the ESM come from Germany alone.
This time, founders from eight additional countries were also surveyed, including Cyprus, Finland, and Portugal. The country comparison provides some clues. However, the sample sizes in the individual countries vary considerably. Nevertheless, we would like to present a comparative overview of the results and show where German founders might be different.
The European Startup Monitor 2016 at a glance
On average, the European companies surveyed are 2.4 years old, prefer to start up in the digital economy, and over 901,452,000 respondents rate their current business situation as satisfactory or good. Three-quarters of the startups surveyed are team-founded.
Where does Germany stand out?
In Germany, the majority of startups are founded by people with German passports, namely 92%. No other European country has as few foreigners as Germany. German startups, however, offer an international working environment, with around 30% of employees coming from abroad (which, however, is still within the European average).
Focus on the domestic market versus internationalization
Compared to the EU, German startups also place the strongest focus on their home market (59.6%, 145.2%). This is certainly due to the fact that there is a sufficiently large and strong domestic market for digital economy products and services.
At the same time, German startups demonstrate a high level of internationalization compared to the study, with 45% of startups planning to expand further in the next twelve months. However, almost a third of founders in Germany have no plans to internationalize at all, ranking lowest among the 17 other countries, where 8 out of 10 startups plan to enter foreign markets.
Access to the foreign market
Startups see the biggest hurdles to internationalization in the different legislation and regulations in other markets. When asked about the strategies European startups plan to use to gain access to foreign markets and customers, most young companies stated that they intend to do so through exports (around 40%) or through partnerships with companies in the foreign market (almost a quarter). Other startups plan to pursue licensing or franchising strategies, branches, or joint ventures.
Serial entrepreneurs slightly above average in Germany
Almost half of the Germans surveyed have already founded one or more businesses, placing them only slightly above the European average. Across Europe, founders are not intimidated: 62% of respondents would start again even if their current startup failed. Very few founders have experience with insolvency. Only just under 6% had abandoned previous ventures for this reason.
Job engine startup
Although on average only 2.4 years old, European startups employ an average of 12 people, including the average 2.5 founders on the team. In Germany, the job engine is running at a higher pace, with 15.4 employees, including 3.5 founders. Only in Switzerland and Finland are the figures higher. Furthermore, an average of 6.6 additional employees are planned over the next twelve months.
Women underrepresented
The proportion of women in startups remains low across Europe. Both as founders (under 15%) and in management positions (under 17%), women are represented below average.
ch is often represented. In Germany, this figure is even lower.
Here, there are another 1 percentage point fewer female founders among startups, and only 15.2% of women in management. By comparison, Great Britain and Spain have twice as many women in management positions, with 30%.
Financing most often through own resources
Across Europe, the most common source of start-up financing is from the young entrepreneurs' own savings (just under €851,000). Financing from family and friends (under €301,000) and government grants and loans (€26,500,000) follows at a considerable distance.
In a European comparison, German startups receive the most government funding, with 35.5%, after Austria and ahead of Spain. At the same time, however, only half of German startups believe that the government provides them with sufficient support or that politicians understand the needs of startups. Accordingly, the main request from the government of 60% of the startups surveyed is for administrative hurdles to be reduced, while around 50% would like tax relief or even more support in raising capital (33%).
Another challenge: Sales
However, the biggest challenge for the startups surveyed is sales and customer acquisition. Three out of four European startups already cooperate with established companies. However, almost 20% of the young companies report this area as problematic and are looking for collaborations with established companies. So, big plans for the European startups.
All figures for Germany come from the German Startup Monitor (DSM). Read here our comment on the DSM results.
