Germany Records 690,000 New Business Founders in 2025 Amid Economic Crisis

Germany recorded a sharp rise in new business founders in 2025, with the total reaching around 690,000 — an 18 percent increase from 585,000 the previous year — driven almost entirely by a surge in part-time side businesses, according to a representative survey by the state development bank KfW. The data comes from a preliminary evaluation of the KfW Entrepreneurship Monitor, which drew on 30,000 telephone interviews and 20,000 online interviews. The findings point to a structural shift in how Germans are entering self-employment, with economic pressure rather than entrepreneurial ambition increasingly cited as the primary driver. The survey defines a founder broadly, covering those who became self-employed in full-time or part-time roles, on a freelance or commercial basis, through a new foundation, participation, or takeover.

Part-time side businesses hit a record 70% share The entire growth in new foundations was concentrated in part-time side businesses, which jumped from 382,000 in 2024 to 483,000 in 2025, pushing their share of all new foundations to a record 70 percent. Full-time foundations, by contrast, showed hardly any change year on year. KfW Chief Economist Dirk Schumacher attributed the trend to the combined pressures of economic crisis and rising living costs, which are pushing people to seek supplementary income through self-employment. „Access to the labor market has become more difficult; even small side jobs are no longer easy to find. Self-employment can be an alternative for additional income here.” — Dirk Schumacher via ZEIT ONLINE The data suggest that for a growing number of Germans, starting a side business is less a deliberate career choice and more a response to constrained household finances and a tightening jobs market. The record share of side-business foundations reflects a broader pattern in which the traditional image of the full-time entrepreneur launching an innovative venture is giving way to a more fragmented, income-driven form of self-employment.

German Business Foundations: 2024 vs 2025: Total founders (before: 585,000 (2024), after: ~690,000 (2025)); Part-time side businesses (before: 382,000 (2024), after: 483,000 (2025)); Share of side-business foundations (before: Below 70% (2024), after: Record 70% (2025))

Most startups remain small, with few employees or takeovers Despite the headline growth in founder numbers, the vast majority of new businesses remained small in scale and limited in ambition. 24 (%) — share of 2025 start-ups that had employees Only 24 percent of business start-ups had employees in 2025, underscoring how heavily the landscape is dominated by solo self-employment. Most foundations were entirely new ventures, set up legally and organizationally for the first time, while only 10 percent involved the takeover of an existing business. The survey also found that two-thirds of founders fundamentally prefer self-employment to permanent employment, suggesting that personal conviction still plays a role alongside economic necessity. Small foundations without staff or inherited structures account for the overwhelming majority of Germany's new business activity, a pattern that raises questions about the country's capacity to generate growth-oriented enterprises.

Total founders 2024: 585, Total founders 2025: 690, Part-time side businesses 2024: 382, Part-time side businesses 2025: 483

KfW warns Germany needs more company takeovers Dirk Schumacher, who has served as KfW Chief Economist since April 2025, used the release of the findings to highlight a separate but related challenge facing the German economy: the shortage of successors for established medium-sized companies. „Germany needs young, innovative companies.” — Dirk Schumacher via ZEIT ONLINE He noted that approximately 545,000 medium-sized companies were looking for a successor by the end of 2029, and called for more people to consider taking over an existing business rather than founding one from scratch. With takeovers accounting for only 10 percent of all new foundations in 2025, the pipeline of potential successors for Germany's established Mittelstand firms remains thin. The combination of stagnant full-time foundations, a low takeover rate, and a surge in micro-scale side businesses presents a complex picture for policymakers seeking to strengthen Germany's long-term business landscape. Germany's KfW has tracked entrepreneurship trends through its annual Entrepreneurship Monitor for several years, providing one of the most comprehensive datasets on self-employment patterns in the country. The broader economic backdrop for the 2025 data includes a prolonged period of elevated inflation and sluggish growth that has weighed on household incomes and labor market conditions across Germany.