Immigrants make important contribution to start-up activity in Germany

Frankfurt am Main (ots) -

- Immigrants create more businesses and more jobs than average
- Immigrants' decision to become self-employed more strongly
determined by labour market

The proportion of immigrants engaging in start-up activity has
been relatively stable for years. One out of every five business
founders is a non-German citizen or has acquired German citizenship
after birth. The annual rate of start-up creation by immigrants has
been 1.86% on average between 2009 and 2014, which is roughly one
tenth higher than the general start-up rate of 1.68%. In 2014,
179,000 immigrants founded their own business. These are the findings
of the latest special evaluation of the KfW Start-up Monitor, the
annually published representative survey of start-up activity in
Germany.

The labour market plays an important role in immigrants' decision
to become self-employed. They start a business more often for lack of
more attractive income alternatives and are thus more often
unemployed before they start. Still, immigrants create more jobs more
often. 'Immigrants engage in their start-up projects more
proactively, even if the decision to found a business was due to lack
of income alternatives. With their higher propensity to start a
business and higher job creation effect, immigrants thus make an
important contribution to start-up activity in Germany', said Dr Jörg
Zeuner, Chief Economist of KfW Group.

The lower age of immigrants in the overall population is reflected
in the age of business founders, which is around one and a half years
lower, at 36, than the age of the average business founder. The
propensity for start-up creation among younger immigrants up to the
age of 30, however, is actually somewhat lower (2.18% vs. 2.34%) but
significantly higher than average among university graduates (3.46%
vs. 2.44%). Like all business founders, immigrants mostly start in
the services sector (around 70%), but in general somewhat more often
in retail than the average (21% vs. 17%).

Despite their higher start-up activity, more immigrants face
obstacles - including difficulties obtaining start-up finance. In the
period from 2009 to 2014, 16% of all business founders had to
overcome financing difficulties at the start, but for immigrants the
share was 24%. However, 13% of immigrants also admitted having gaps
in financial knowledge (vs. 8% overall).

Immigrants are more often and more readily willing to abandon
their new business after founding it. Three years after their
creation, 70% of all new businesses remain while only 60% of
immigrants' businesses are still running. This is mainly due to their
structural characteristics. The business founders' younger age, their
more frequent start-up from unemployment and stronger focus on retail
are among the factors associated with the lower survival rate of
start-up projects. 'What is crucial for the risk of closure is not
citizenship, but the founder's experience and knowledge, and what
projects they have realised", said Dr Zeuner. Overall, however, the
labour market plays a more important role for immigrants. They are
more likely to end their self-employment when offered attractive paid
employment.'

Note:

The findings are from a special evaluation of the KfW Start-up
Monitor 2015, a representative survey of start-up activity in
Germany, which is available at www.kfw.de/fokus. Press material such
as charts and photos on the topic is available at
www.kfw.de/gruendungen-durch-migranten.

Contact:
KfW, Palmengartenstr. 5 - 9, 60325 Frankfurt
Kommunikation (KOM), Sonja Höpfner,
Tel. +49 (0)69 7431 4306, Fax: +49 (0)69 7431 3266,
E-Mail: presse@kfw.de, Internet: www.kfw.de