Start-Ups Predicted to Increasingly Drive Growth in German Economy

October 2021

Traditionally, established medium-sized, family owned companies are seen as the heart of German business, but a new study says that could be changing.

The paper, entitled “Entrepreneurship Zeitgeist 2030: Making start-ups Germany’s next economic powerhouse” by consultants McKinsey sees the potential for 41,000 new start-ups by 2030, along with 1.4 million new jobs and a market capitalization of EUR 2.3 trillion. That would be more than the total worth of Germany’s current blue-chip DAX 40 stock index. At present some 2900 are founded in Germany every year.

“Technology advancements, particularly in the areas of digitalization and connectivity, are compelling Germany to reimagine the fundamentals of its economy,” the report states. “The widespread conclusion is that a robust start-up ecosystem—enabled by these technology trends and comprised of founders, their businesses, corporates and SMEs, educational institutions, investors, and government agencies—needs to become a pillar of the economy if Germany is to remain prosperous at home and competitive abroad.”

The paper also speculates that a key to expanding growth rates in the start-up ecosystem could be a “German way” including principles such as credible delivery, responsible entrepreneurship and cluster organization.

Establishing powerful networks is key for successful start-up ecosystems. That is why projects such as Germany’s Digital Hub Initiative are increasingly important. 12 individual hubs with different industry specializations form a Germany-wide network and link start-ups, SMEs, corporates and investors. Focusing on individual technology fields in each hub like Digital Health, InsurTech or Logistics allows not only a targeted address of international companies, top researchers, talents but cross-cutting technology collaborations.

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