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The Potential Offered by Second-Chance Entrepreneurship

Steinbeis expert Samantha Michaux talks about the opportunities and challenges of entrepreneurial re-starts

Germany lacks a culture of embracing failure. Insolvency and failure are seen too little as an opportunity and instead more or less considered as a blemish. This is something Samantha Michaux feels passionate about and as Senior Project Manager at S2i she helps entrepreneurs to get off to re-start again. Expert in the field of business development and equity investments and ambassador for the EU initiative “Startup Europe”, she has discussed necessary changes in German business culture with TRANSFER magazine.

Ms. Michaux, the stigma of failure often sticks to faltering entrepreneurs, even when they set up a business for a second time. In Silicon Valley, however, the failure of first projects seems to be part of the recipe for success. What are the odds of a culture of “getting a second chance” becoming established in Germany?

Getting up again after falling entails several hurdles and complications in Germany, especially if you were insolvent and have a negative credit record with Schufa. So, lots of “re-starters” try to gloss over their past record, which is why failure is socially stigmatized in our society. It’s therefore important to establish a more open attitude to failure, especially on a societal level, and use examples and role models to show that failure doesn’t have to be the end of your career as an entrepreneur. We need a change of culture in Germany.

One term you use in this context is “protected area” – which Steinbeis 2i offers to entrepreneurs in crisis. What is this concept about?

Steinbeis 2i developed this concept together with the social enterprise TEAM U Restart gGmbH, the first non-profit organisation in Germany to specifically address independent entrepreneurs in crisis. Our concept comprises a seminar in a protected area for people either in the middle of an entrepreneurial crisis or with a crisis behind them. They are supported by trainers/experts with experience in crisis situations, who show them how to deal proactively with the experience of undergoing a crisis or insolvency, so they in a position to make a success out of a re-start. They are allowed to remain anonymous.

What kind of challenges do re-starters face?

First, the exit from the first company must be as clean as possible in order to get a second chance: in time, in compliance with all legal requirements and with open cards towards the bank and all other creditors. Precisely because it is difficult for re-starters to finance a new venture, it is even more important to convince lenders and suppliers that they have learned from their mistakes. The biggest hurdle for a successful re-start is often the lack of access to the required seed capital. Due to previous bankruptcies and personal liability – especially in the case of bank loans – private savings are depleted; collateral is realized, and existing assets are brought in to settle debts. As long as liabilities still exist or the residual debt discharge has not yet been granted, re-starters must therefore assume that they are considered “not creditworthy” by banks. Therefore, other means of financing must be found, such as non-repayable grants, equity investments or credit guarantees.

Secondly, a precondition for making a success out of the second attempt is carefully analyzing the reasons why things went wrong. This is about being honest to yourself. What are my personal vulnerabilities, my professional weaknesses, and how can I compensate for them when I start again and deal with the next set of challenges? It’s also important to think like an entrepreneur! If you’re lacking in certain areas when it comes to entrepreneurial capabilities, you’ll also fail with your second project.

Your offer is part of the European initiative “DanubeChance2.0”. What objectives is the European Commission pursuing with this project?

While showing how startup-friendly certain regions and countries are, but until now there are no evaluations that turn the spotlight on the conditions that need to be in place for re-starters and entrepreneurs in a crisis. Given this, the goal of the European Commission in sponsoring the DanubeChance2.0 Interreg project is to tap into unexploited potential that re-starters offer to the Danube region. The consortium comprises eleven partners along the Danube corridor, from Bosnia, Germany, Austria, Croatia, Serbia, Moldova, Slovakia, Slovenia, Hungary, and Romania. The partners have initiated a broad-based process of dialog between key stakeholders from business, science, and politics on the one hand, and on the other: entrepreneurs. This has also involved examining the legal, socio-economic, and cultural conditions that drive business startups. The aim of the initiative is to improve the conditions faced by re-starters in the regions covered by the project. 

What tools or programs are provided for re-starters or entrepreneurs experiencing a crisis?

In the framework of “DanubeChance2.0”, the “Trial and Error” Re-Design Transnational Academy was launched, which offers concrete support to entrepreneurs in designing strategies for their re-start. The Academy’s topics

range from (re-)financing and negotiations with investors to issues such as business management and team building. The training involves a series of online courses and workshops run by experts, can be individually adapted and thus represents a unique offer for re-starters. The Academy will be implemented and further developed by a network of renowned experts along the Danube corridor.

The contents of the modules have been made freely available online for coaches and trainers dealing with these topics. The contents may be used under the condition that the logos of the DanubeChance2.0 project and the EU flag are included.

In October 2020, we set up an incubation program for re-starters as a pilot project, whereby re-starters are coached by our experts in their new ventures and business development. Our local partner, TEAM U Restart gGmbH, in cooperation with the regional Chambers of Industry and Commerce, is offering free sensitization training in November and December 2020 to strengthen skills for early crisis management. These measures are funded by the Ministry of Economics, Labour and Housing of Baden-Württemberg as part of the state initiative “Start-up BW” and take place in cooperation with the regional Chambers of Industry and Commerce. Further information on the training courses can be found on our website.

Further reading:

In Germany, People Like to See Failure as Being at Fault
An interview with Bert Overlack, managing director of bert.overlack GmbH

Sensitization training schedule: https://www.startupbw.de/themen/re-starter/
Samantha Michaux being interviewed in German: www.youtube.com/watch?v=kF19Dp1sCfU&feature=youtu.be
Further information on DanubeChance2.0: www.steinbeis-europa.de/danubechance2-0


Samantha Michaux
Senior Project Manager for business development and equity investment
Steinbeis 2i GmbH (Stuttgart)