Overview of startups
In 2021, Germany was ranked fifth in the world among leading countries for startups. Startups are founded in different types of industries, but in Germany the most popular that same year was information and communication technology, accounting for almost 30 percent of new businesses. Although founders start companies because they have a good business idea, there are also other motivating factors. As of 2021, the driving reason was actually achieving independence.
Financing startups
Financing is a big part of founding a startup as they are reliant on funding from external sources to launch the company and/or product before it starts producing a profit. In 2022, almost 75 percent of startups in Germany were financed through the savings of the founders themselves. This, however, is not the only way in which startups are financed, often external investors will put money into startups in the hope of gaining high returns. 601 German companies were financed through venture capital in 2021. A more recent phenomenon that has taken hold of the startup financial scene is crowdfunding. Crowdfunding is typically when many people raise money for a specific cause or project and usually undertaken via the internet through websites such as GoFundMe or Kickstarter. These websites have also gained traction in Germany.
