Does founding a company attract social advancement? As a new study shows, start-ups are mostly members of wealthy families – with the appropriate education.
Anyone who founds a modern, growth-oriented company usually comes from wealthy families. The parents usually studied and are often entrepreneurs themselves. On the other hand, if parents have a low or middle school education, the chance that their children will try to become entrepreneurs is low. This also applies to children from civil servant households. These are the results of one Study by the Bertelsmann Foundation and the start-up associationwhich were released today.
Companies examined were ten years old or less, innovative and geared towards growth. These so-called start-ups often spend years developing new technologies or products at high cost. They are financed by private individuals, funds, special investors or funding programs. Start-ups are therefore the exception among company start-ups. The majority are made up of craft businesses, trading companies from kiosks upwards and freelancers with a few employees.
Parents mostly have a high school diploma
Anyone who has the confidence to found a start-up is usually well educated: 85 percent have a degree from a university or technical college. Most have studied business, technology or natural sciences. Another study by the start-up association shows that they are mostly men. Only one in five startups is started by a woman, whose companies usually remain smaller and less well-financed than those founded by male founders.
The study data also shows that a third of founders have parents without a high school diploma. And the founders themselves don’t necessarily have to have learned for long. Four percent have vocational training without a degree. More than one in ten bold companies are founded by people who believe they have enough experience and skill without a certificate.
Founders who are not at least upper middle class take action later in life. On average they are already 42 years old. Their companies regularly have less outside capital and employ fewer employees than those of those who are socially better off.
meaning of role models
Anyone who experiences entrepreneurship being discussed at the dinner table from an early age, who gets to know entrepreneurs among their parents’ friends and plays with the children of entrepreneurs, obviously approaches starting a business with far fewer worries and inhibitions. Through relationships there is advice and access to financiers that children of workers, civil servants and many employees do not have. “Overall, it is clear that social background has a strong impact on the likelihood of starting a business – specifically, it is about role models, confirmation and security,” says the study.
While the study’s figures suggest that the upper economic strata of society are stabilizing with start-ups, Julia Scheerer from the Bertelsmann Foundation believes that such new companies can create “more equal opportunities in the economy”. The cover photo of the study “Start-ups and social background” shows young, middle-class, educated, urban and multi-ethnic company founders. The start-up association and the foundation demand that broader groups should be introduced to entrepreneurship in order to enable more promising start-ups.
Wealth through entrepreneurship
Once the new company is running reasonably well, everyone is happy – regardless of what social class they come from. Nine out of ten young entrepreneurs say that they want to start a business again and show strong entrepreneurial thinking.
The Deutsche Bundesbank’s regular wealth studies show again and again that entrepreneurship is the ideal route to real wealth. On average, entrepreneurs in Germany have assets of one million euros – after deducting debts.
Risk of bankruptcy
Not every promising business start-up is successful. Start-ups in particular are risky: on the one hand, because their products are usually not yet fully developed and no one knows whether there is a market for them; on the other hand, because, as the jargon says, they work with “OPM” – “Other People’s Money”.
This makes some daring founders too daring. Figures from the Federal Statistical Office show that well over half of bankruptcies affect companies that are less than eight years old.