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When migrants become company founders

The desire to set up a new business in Germany is followed by the frustration over the hurdles involved. A third of entrepreneurs drop out after three years. For immigrants, the challenges are often even greater.

Daria Bojkov (main picture) has almost survived the critical phase. Two years ago, she founded an adult day-care center in the German town of Hamelin and has been on the market ever since. The first three years in business are generally known to be the hardest period for young entrepreneurs, particularly for people like Bojkov who has foreign roots.

According to the latest figures released by the Frankfurt-based development bank KfW, 39 percent of migrants who have turned to self-employment drop out after three years. Overall, roughly one in three


(30 percent) disappears from the market after 36 months.

Difficult conditions

A whole range of difficult conditions lead "to a significantly increased risk of migrants dropping out," KfW said. For instance, migrant startup founders are, on average, younger than those from the general population, and also face greater financial difficulties.

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Bojkov, who hails from Ukraine, talks about a completely different set of challenges. "As an individual entrepreneur, I had to gather a lot of information by myself. I have practically fought my way through," she explained. The fact that German is not her mother tongue hasn't helped matters either.

Many financial advisors at banks have bluntly asked Bojkov to get her documents checked for spelling mistakes to be on the safe side, Bojkov said. "Basically, we're aware that it is more difficult for us immigrants than for Germans," stressed the 36-year-old, who has been living in Germany since 1996.

Bojkov, who is a trained nurse, currently leads a six-member team. There is high demand for her day-care business, she says, pointing out that even her husband - also a native Ukrainian – now works at the center. Trade and services sectors - such as healthcare and nursing services - have traditionally been the economic areas preferred by many entrepreneurs to set up new businesses.

The Association of German Chambers of Commerce and Industry (DIHK), in a recent report, points out that 85 percent of all founders prefer either to become traders (23 percent) or to set up a service company (62 percent).

Crucial role

Entrepreneurs from countries such as Turkey, Russia, Poland and Italy have been playing a decisive role for years in Germany's start-up scene. In recent years, a fifth of all startups in Germany have been founded by migrants. According to KfW, the proportion of migrants among the total number of entrepreneurs in Germany remained largely stable at around 20 percent. For instance, the figure stood at 21 percent in 2013, up from the 2012 level of 19 percent.

"The inclination to set up new businesses is slightly higher among migrants than in the general population," concludes the development bank KfW. In 2013, there were 868,000 people in Germany who turned to self-employment, that's 93,000 more than the year before.

Furthermore, founders with foreign roots are more willing to employ people, states KfW. For instance, between 2008 and 2013, around 42 percent of migrant entrepreneurs hired employees to work for their startups. But that figure stood at just 29 percent when all entrepreneurs were included.


"With their higher propensity to become self-employed and to create jobs, migrants represent a mainstay in Germany's startup scene," underlines KfW. Their contribution to the German economy is not to be underestimated, particularly in times of

increasing immigration

into the country.

In 2013, around 1.2 million people immigrated to Germany, according to the country's National Statistics Office, Destatis. At the same time, net migration - the balance between immigration and emigration - jumped to a 20-year high of 437,000 people. Many of them

moved to Germany

in the hope of a better future.

"I can understand that the first two to three years are critical for an entrepreneur," stresses Bojkov. "It is difficult. But I see more of a development on the healthcare market, which provides a reason for making such offers."

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