What are the biggest hurdles for starting a business as a person with a migration background or history in Germany?

Starting a business is a very complex process that can be hard for anybody. However, for people with a migration history, there are additional hurdles that should be taken into consideration when planning consultations, trainings or the establishment of supportive structures. Hurdles, especially for first-generation migrant founders, are:

  • Lack of networks 34.5%
  • Bureaucratic hurdles after founding 29.1 %
  • Language barriers 21.4%
  • Bureaucratic hurdles “upstream” 17.7 %
  • Cultural differences 10.0%
  • Recognition of degrees 3.6% [1]

Let’s take a closer look at a few of those aspects, that are also closely intertwined with each other:

Raising capital: is one of the key hurdles in the start-up ecosystem and for first-generation migrant founders, it is even higher. This is also reflected in the amount of funding, especially due to the lag in venture capital.

Lack of information in other languages and bureaucratic hurdles: Even though there is information about founding and self-employment available, the access is not low-threshold enough. Most resources, even those that are supposed to especially cater to migrated entrepreneurs, are in German. Furthermore, they are only comprehensible, when people already know business terms and are otherwise versed in the topic. This might be one reason why people rather consult their own communities for support[2] before taking advantage of the programmes the German state offers them.

Structural discrimination in the form of racism: The survey of the Startup Verband specifically asked about racist experiences during the founding activity and a look at the different groups of migrant founders gives an indication of the extent and focus of racist experiences. The study itself describes the high proportion of those among people who came to Germany after completing their studies at university as “striking”: During the founding process 51,4% of people belonging to the „first generation migrants“ that did not go to university in Germany had to experience racism. In the group of the „first generation“ where people went to a German university, it is still 32,6%. In the group of the „second generation“, it is 16,7%. If we look at a few examples of dimensions of racism, 19,7% of the “first generation” individuals experience racism at state authorities and agencies, 16,5% experience it at bank institutes, and 13,3% in their relationship with investors.[3]

Those numbers might offer an explanation for why people with a migration history have a harder time raising capital.

Cultural specifics that might make consultations harder: Another issue is that some people who migrated find „self-promotion“ unbelievable and inauthentic, because it is not part of the culture they were socialised in. Others find it difficult to „expose“ themselves by showing “their weaknesses” (aka questions they have) and rather not address them during consultations. In addition, people with a migrant background tend to see the business plan more as a homework assignment from (or for) the advisor or as an unnecessary control instrument of the banks.[4] This should be taken into consideration when offering consultations. 

If you want to know more about the topic and are also interested in the situation in other European countries, check out the WINBIZ Social Report, which will be online very soon. We’ll keep you updated!

Sources:

Startup Verband: Migrant Founders Monitor. Migrant_Founders_Monitor_2022.pdf (startupverband.de)

[2] Information Flyer of the BMWE: “Gründerzeiten 10” p. 2.

[3] Startup Verband: Migrant Founders Monitor. Migrant_Founders_Monitor_2022.pdf (startupverband.de)

[4] Information Flyer of the BMWE: “Gründerzeiten 10” p. 2.

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