Founder study: Germany has a new migrant elite

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In Germany there are more and more start-ups that were set up by founders with a migration background.

The most prominent example is the vaccine manufacturer Biontech from Mainz, headed by the research couple Özlem Türeci and Ugur Sahin, who are descended from Turkish immigrants.

Other examples of such growth and innovation-oriented start-ups from the past few years are Auto1, Delivery Hero, ResearchGate, Gorillas, Omio, GetYourGuide or Qunomedical, which were also set up by founders with foreign roots.

The "Migrant Founders Monitor" published by the Federal Association of German Startups together with the Friedrich Naumann Foundation shows how important the migrants are to the German start-up scene.

According to this, a good 20 percent of the founders have foreign roots.

They played "an important role in the start-up ecosystem and are therefore a driving force behind economic innovation in Germany," says the study.

Especially since these entrepreneurs are generally highly educated and particularly willing to take risks.

There are, however, major differences within Germany in the regional distribution of “migrant founders”.

Source: WORLD infographic

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While their share in North Rhine-Westphalia and Berlin is particularly high at 26.6 and 21.2 percent, respectively, the rate in the five eastern German federal states and in Saarland is below one percent.

Bavaria, with 8.5 percent, as well as Baden-Württemberg and Hesse with 11.6 percent each, have an average value.

The data are based on the results of the “German Startup Monitor 2020”, for which around 1900 founders nationwide were surveyed.

The capital has been one of the founding strongholds in Europe for several years.

According to the report, Berlin is particularly attracting people from abroad to set up a start-up in Germany.

In North Rhine-Westphalia, on the other hand, it is the founders born here with foreign origins who shape the ecosystem.

The advancing internationalization is also reflected in the workforce, a good quarter of which do not come from Germany.

14 percent of the employees come from other European countries, 13 percent from more distant parts of the world, as the "German Startup Monitor 2020" shows.

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This trend is particularly advanced in the capital: in the Berlin start-ups, every fourth employee comes from another European country;

a further 17 percent immigrated from another region.

English has become the working language more and more often.

In Munich this applies to 43 percent and in Berlin even to 63 percent.

Slightly more than half of the founders with a migration background were not born in Germany, but belong to the first generation.

These immigrant founders are particularly well qualified.

91 percent are academics.

And every second of them has a degree in mathematics, natural sciences or technology - which often comes from a German university.

The study by the German Startup Association and the Naumann Foundation emphasizes that migrant founders have a great advantage in their internationality.

Because the first generation not only use English as their working language particularly often.

Their workforces are even more international than is generally the case in other start-ups.

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And half of the immigrant founders have good or very good international networks.

Almost 80 percent are planning to internationalize their businesses.

But the founders of the first generation in particular also have to struggle with special problems.

In addition to language barriers, about which 56 percent complain, the bureaucracy is the biggest nuisance - both before and after the establishment.

There are often difficulties with the visa or work permit beforehand.

After the start you have to deal with the social security and the residents' registration office.

The recognition of their qualifications and degrees acquired abroad, on the other hand, was only a problem for 6.5 percent of migrant founders born outside Germany.

The immigrants are clearly at a disadvantage compared to the local founders when it comes to financing.

Both with state funding and with private investors, the migrants who set up a start-up have a harder time than other founders.

"The gaps in the forms of financing show that first-generation migrant founders in particular are confronted with resource problems throughout the development process," the report notes.

This is a serious problem as business growth is heavily dependent on external sources of capital.

While the first generation migrant founders were able to collect an average of 1.1 million euros, this figure is significantly higher for all start-ups at 2.6 million.

And so the average number of employees among immigrant start-up founders, at 10.2, is below the average for all start-ups of 14.3 employees.

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