"Failure is stigmatized in Germany"
The number of corporate insolvencies in Germany is increasing significantly. In the first half of 2024, 11,000 companies filed for insolvency, which is approximately 30 percent more than in the previous year-end period, according to Creditreform's economic news. Insolvencies reached their highest level since 2016. This not only affects the traditional, established German economy, but also the startup scene. In the previous year, as many startups went bankrupt as never before. Many founders therefore assess their situation poorly. However, insolvency does not necessarily mean the end. On the contrary, it can also be a way to restructure a company.
Janina Mütze experienced this firsthand. Almost ten years ago, she founded the market research institute Civey. Her startup focuses on online surveys that can be embedded on websites. Towards the end of Christmas 2023, it was clear that the planned financing for her startup would not come through. At the beginning of this year, Civey filed for debtor protection proceedings.
ntv.de: You have had turbulent weeks and months. What happened?
Janina Mütze: 2023 was our most successful year ever, and every entrepreneur knows that just before Christmas, you're looking forward to taking a nice, long break. But then disagreements among our shareholders escalated. Like many other companies, we were venture capital-financed. It was clear to me: We couldn't go on like this. So, just before Christmas, it was all or nothing, and we had to act.
What does that mean in this case?
We looked for new financing options with our former shareholders over the Christmas holidays. That didn't work, so in January, we decided to use other means, go into debtor protection, and try to restructure our shareholder structure in self-administration. A very tough decision, because a debtor protection proceeding, theoretically, comes from insolvency law. That word "insolvency" is, in Germany, insanely stigmatized. For us, it was clear: Either we were running into a wall or we were taking all our strength and restructuring ourselves, and using the means that the law provides. We then filed a petition for debtor protection in self-administration and were able to steer this process as managing directors. We had all the means at our disposal to restart the company.
How difficult was this decision for you? While insolvency and what you did are two different things, they are often mixed up. Was that clear to you?
Yes, that was clear to me. Pragmatically, I would always say: Isn't it great that there are such means available. A company has the opportunity to heal itself and start anew. However, we are a company that operates very publicly and is closely watched. That's why we didn't want to hide anything. We first informed our team, then our customers and business partners, suppliers, all stakeholders, and went public with the result that our debtor protection proceedings were on the front page of Handelsblatt.
Did this moment feel like failure to you?
No. I realized that we were entering a painful situation. It took me a few days and many conversations with partners, friends, and colleagues to take back control. As long as you have control, it goes well for you. That's why it didn't feel like failure.
Just as things are going better and better for you when it comes to founding [startups]. The times for startups have changed. How do you perceive this?
Behind the scenes, a lot is happening that many do not want to speak about. But we must also be careful not to destroy values that have been built up, in the heat of the moment. It's often not a lot of money that's missing for a business to keep running profitably. We must give these companies time to transition from the growth financing phase, which we had a few years ago, where we wanted more and invested more, to a profitable business model. This can take different lengths of time for different companies. I hope that we have enough calm in the ecosystem to not suddenly pull the money out in a panic. I wish all entrepreneurs the best of luck.
Isn't that also a cleansing of the market that we see in the startup world?
Yes, a significant cleansing has taken place. But we are currently in a phase where as a whole economy, we are not bringing about the growth that we wish for. The prospects are rather gloomy. Confidence in the country is still at a low point. And I believe it is absolutely crazy important that we don't hide away and say: These were just a few good years where we made a little money and that's it. We should continue to have the claim to finance innovation. Less exaggerated, but without this digital scene and the courage for innovation and also for risk, the German economy will not remain future-oriented for long.
With Janina Mütze spoke Janna Linke. The conversation was shortened and smoothed out for better understanding. You can listen to the full conversation in the ntv podcast "Startup - Completely Honest."
Despite the increasing number of corporate insolvencies affecting both established companies and start-ups in Germany, Janina Mütze, the founder of Civey, a market research institute specializing in online surveys, chose to file for debtor protection proceedings to restructure her company. This decision, while stigmatized in Germany due to the negative connotations of 'insolvency', allowed Civey to utilize the legal provisions and restart its operations.
