Multi-crises demand risk management for startups

The mood is basically better at the beginning of 2023 than in the Corona year 2020. The German Startups Association collected the necessary facts with its Monitor 2022. "We are facing great uncertainties and the founders assume that the economic environment will also become increasingly difficult in the startup sector," explained Gesa Miczaika, deputy chairwoman at the startup association.  

Expensive energy, restrained consumers in B2C business, more critical investors and the pressing problem of recruiting skilled personnel continue to form multi-crises for startups. Still, there are positive signs. Katharina Neuhaus, principal at Vorwerk Ventures, went on Startup Insider's November 2022 podcast to suggest that while the average number of startups has declined over the year. However, the quality of the young companies is better, especially if they are based on technological developments. In addition, Neuhaus added, management is more realistic in its approach, since financing will foreseeably require more convincing of investors.

Leuphana makes an impact

Reinhard Schulte and his doctoral student Maximilian Wagenknecht underscore the trend assessments. The Lüneburg scientists see the current framework conditions for newly founded and equally young companies as a confirmation of their research on "Risk Management for Startups." The goal is to develop a risk management system adapted to the special needs of startups in their various stages of development. This should improve the chances of success for startups.

The topic of risk management is becoming a must for the management of startups. Schulte and Wagenknecht are convinced of this. With reference to the 10th Startup Monitor (2022), the Federal Association states the current focus of startups: "The increased costs of energy and raw materials are leading to enormous challenges in the established economy - with the development of innovative technologies, startups are essential in this field: 46 percent want to make a targeted contribution to environmental protection and resource conservation and see themselves as part of the Green Economy. In doing so, startups combine ecological sustainability and growth: 61 percent pursue both goals as an important part of their corporate strategy, thus bringing the ecological transformation to the breadth of the economy."

To do this successfully, the associated risks must be actively identified and managed. Reinhard Schulte explains how risk management can be adapted to the needs of startups: "The issue of risk is playing an increasingly important role, especially in view of radical changes in the environment or context. This also applies to investors. Risk management is likely to play a greater role in startup research in the future. Our own research fits in well here. We are working on adapting theories and concepts of risk management to the special case of startups." And Maximilian Wagenknecht adds:  "Startups need risk management that is tailored to them and grows with them at all stages of development. This is especially true in times of uncertainty and higher investor demands."

In an interview with the School of Management and Technology at Leuphana University Lüneburg, the two academics, Professor Dr. Reinhard Schulte and doctoral student Maximilian Wagenknecht, classify the current trend. They explain the matching teaching and research at the university and shed light on the cooperation network.

Leuphana University Lüneburg
Institute of Banking, Finance & New Venture
Universitätsallee 1,C6.103
21335 Lüneburg

Prof. Dr. Reinhard Schulte

Maximilian Wagenknecht, M.Sc.