The allure of launching a business in Germany is rapidly diminishing, according to a new report from the German Chamber of Industry and Commerce (DIHK). The “Founding Location 2025” report reveals a significant drop in the attractiveness of Germany as a place to start a company, fostering widespread discontent among aspiring and current entrepreneurs. Nearly six in ten founders now express dissatisfaction with the prevailing conditions, a stark seven-percentage-point increase from the previous year and a near doubling of those feeling “very unsatisfied”. Even more concerning, this assessment is notably worse than during the depths of the COVID-19 pandemic.
This growing disillusionment is directly impacting the founding interest, which has stagnated at historically low levels. Despite a slight uptick compared to last year, the number of consultations regarding business creation, conducted by DIHK, remains the second-lowest since the survey began in 2003. Approximately 200,000 interactions with the DIHK’s founding services – including initial consultations, advice sessions and founder events – were factored into the report.
DIHK President Peter Adrian voiced deep concern over the findings, emphasizing that “Founders are an innovation engine for our economy. If we lose their dynamism, we lose our future”. He urged for a renewed focus on fostering an environment that encourages risk-taking and rewards entrepreneurial spirit, particularly among younger generations who are often at the forefront of new ventures.
The report pinpoints the root of the problem as a confluence of factors perceived as largely self-inflicted. Founders consistently lament navigating a “jungle of regulations and ordinances” creating a time-consuming and resource-draining ordeal. The complexity of forms, responsibilities and regulations breeds uncertainty and frustration, particularly during the crucial initial phase. High taxes, surging energy and labor costs and insufficient digital infrastructure are further cited as significant impediments to entrepreneurial activity.
Interestingly, a driving force behind the desire to start a business remains a deep-seated aspiration for independence, cited by roughly two-thirds of those seeking advice. However, a rising number – 34% – are compelled to consider self-employment due to a lack of alternative employment options, often spurred by layoffs in struggling industries. A positive trend noted in the report is the increasing participation of women seeking founding advice, with female participation now approaching parity with men, a notable shift from twenty years ago when women represented just over a third of those consulted.
Founders across the board are demanding tangible improvements. Three-quarters advocate for faster and simpler regulations, while over half are calling for a simplified tax system. Greater access to public funding, increased societal understanding of entrepreneurship and lower energy prices also top the wish list.
While the German government’s recent modernization agenda has promised streamlined processes, including the potential for company formation within 24 hours, the DIHK argues that implementation must be swift and comprehensive. Verena Pausder, Chairwoman of the German Startups Association, echoes this sentiment, emphasizing the need to accelerate processes and improve access to capital, especially for the scaling of new ventures. The discrepancy in challenges faced by startups and traditional businesses highlights a crucial need for tailored solutions to revitalize Germany’s innovation ecosystem and secure its competitive edge.