Australia among top five G20 markets for entrepreneurs: EY report
Wednesday 28 August 2013 — Australia has a favourable environment for entrepreneurial activity, ranking in the top five among G20 countries, but more can be done to foster entrepreneurial businesses and provide a strong and diverse foundation for the country’s future economic growth, according to a new report released by EY today.
EY Partner, Annette Kimmitt said, “With the mining investment boom declining, successful entrepreneurial businesses will be more important than ever for future job creation and the sustainability of the Australian economy.”
“EY’s G20 Entrepreneurship Barometer found our biggest challenges in fostering entrepreneurs lie in access to skills and funding, as well as the perception of entrepreneurship as a viable career choice. Government, corporations and entrepreneurs need to work together to address these issues and ensure we continue to create an environment that supports entrepreneurial businesses.”
Launched ahead of the G20 Leaders Summit in St Petersburg next week, the EY G20 Entrepreneurship Barometer 2013 is based on a survey of over 1,500 leading entrepreneurs and qualitative data on entrepreneurial conditions across the G20. It also draws extensively on EY’s own research of more than 200 government leading practices. The barometer follows the EY report, Avoiding a Lost Generation, which was launched at the Young Entrepreneurs Alliance (YEA) Summit in Moscow in June, and provides more than 40 key recommendations for governments, entrepreneurs and corporations to improve the conditions for entrepreneurship to stimulate growth and jobs.
The barometer provides a new way of ranking G20 countries across five key areas important for fostering entrepreneurship: access to funding; entrepreneurship culture; tax and regulation; education and training; and coordinated support.
|Key pillars||Australian ranking among G20 countries|
|Access to funding||5th|
|Tax and regulation||8th|
|Education and training||2nd|
Access to funding – Australia ranked 5th among G20 countries
- 53% of Australian entrepreneurs surveyed say access to bank loans has deteriorated
- 34% reported seeing a dip in venture capital funding
- 37% say government funding has deteriorated
“Small capital markets are a key hindrance for entrepreneurship in Australia, which over the years has attracted low levels of private equity compared to other mature G20 markets,” Kimmitt said.
“Our research found that young entrepreneurs were particularly vulnerable, with 44% of Australian entrepreneurs under 40 reporting they find it very difficult to access funding.”
“In this environment, any measures that support investor confidence and attract new sources of funding will be important in ensuring Australia’s entrepreneurs don’t lose their drive.”
“On a positive note, the survey showed some interesting developments in alternative funding sources, such as crowdfunding, with a number of new platforms opening up in the Australian market in recent years. This is reflected in the fact that 40% of local entrepreneurs thought that access to crowdfunding had improved in the last three years, compared to an average of 34% across the G20.”
Entrepreneurship culture – Australia ranked 5th among G20 countries
- 48% believe Australia has a culture that encourages entrepreneurship – down from 80% in 2011
- Australia publishes more scientific and technical journal articles than any other G20 nation.
“Generally Australia has a favourable entrepreneurship culture, largely attributed to our strong innovation and research culture, low insolvency costs and higher than average media attention devoted to entrepreneurs,” Kimmitt said.
“Despite this, there has been a significant drop in sentiment since 2011. Perhaps unsurprisingly this change coincides with a dip in the overall level of confidence in the local economy, reflecting the slowdown in the mining investment boom and Australia’s vulnerability to a significant downturn in China.”
“Another area for improvement is the view of entrepreneurship as a career choice. Addressing attitudes towards business failure and improving communication around success stories would go a long way to positioning entrepreneurship as a valid alternative to more traditional jobs.”
Tax and regulation – Australia ranked 8th among G20 countries
- 53% of local entrepreneurs would like to see increases in tax incentives focused on innovation
- It takes only two days to set up a business in Australia, against a G20 average of 22 days
“Australia‘s overall ranking on tax and regulation is impacted by the negative perception of the business environment expressed by local entrepreneurs who want to see simplified tax rules and regulations, as well as reduced of corporate income tax,” Kimmitt said.
“Globally, 38% of entrepreneurs say they want the ability to voice their concerns on business regulations, making this their top suggestion for how countries could improve their regulatory environment.”
“A thriving entrepreneurial culture is critical to diversifying Australia’s business economy, so the State and Federal Governments should ensure they are listening to the needs of entrepreneurs.”
Education and training – Australia ranked 2nd among G20 countries
- 50% saw an improvement in entrepreneur-specific courses at universities and business schools
- 38% say the top priority for improving student perception of entrepreneurship is the promotion of success stories
“Highly qualified talent represents a vital ingredient for any thriving entrepreneurial ecosystem, particularly those that support advanced technology, scientific or knowledge-based enterprises,” Kimmitt said.
“Education is a key strength for Australia, ranking second in this area among G20 countries, with only France ahead of us. However, more than a quarter of entrepreneurs surveyed reported a decline in government training programs suggesting that a renewed focus could be needed if we are to maintain Australia’s strength in this key area.”
“Interestingly, over two-thirds of Australian survey respondents (69%) now think students need access to specific training to become entrepreneurs, a reversal in sentiment from 2011 when 64% of respondents didn’t think training was required.”
Coordinated support – Australian ranked 15th among G20 countries
- 54% of Australian entrepreneurs surveyed said mentoring opportunities had improved
- 29% said improving government start-up programs was key to accelerating entrepreneurship
“Like many mature economies, coordinated support is one of the weaker areas in Australia’s overall entrepreneurial ecosystem, although at 15th among G20 countries we still rank higher than several other mature economies including the US, UK and Canada,” Kimmitt said.
“Notable strengths for Australia in this area include business incubators, entrepreneurial workshops and mentor programs. However, on a less positive note, almost a third of survey respondents reported seeing deterioration in government start-up programs.”
“While Australian entrepreneurs view business incubators as the most important support mechanism for improving the long-term growth of entrepreneurship, they also believe the government should be focused on delivering more start-up programs. Corporations also have a role to play here, creating corporate incubator or accelerator programs to help provide entrepreneurs with access to resources, testing facilities, pilot customers and funding.”
“Entrepreneurs represent two-thirds of employment in the G20 and they are a critical engine for job creation, including youth employment. We need to ensure we are giving them the tools and environment that will enable them to succeed. The message is clear – governments, entrepreneurs and corporates have to work together to spur growth across the G20,” Kimmitt said.
President G20YEA Australia and Director of Entrepreneurship at Enterprise Network for Young Australians (ENYA), Jeremy Liddle said, "It is clearly imperative that Australian governments, at both Federal and State levels, deliver more start-up programs that can spark new business growth. As the G20YEA Australia member, and host of the summit in 2014, ENYA is extremely excited to be working with EY in order to influence government and business leaders to encourage entrepreneurial ecosystem. Start-up programs must be a priority.”
"It was with great delight that we saw the primary recommendation of the B20 to G20 leaders, within the job creation task force, that business and government should focus on encouraging entrepreneur ecosystems. We now hope that more business and government leaders within Australia reach out and support organisations, like ENYA and EY, that are working on this."
The full report, The power of three: Together, governments, entrepreneurs and corporations can spur growth across the G20, is available at ey.com/G20ey.
1Per 10,000 people. Source: World Bank, 2007-2009 average.
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About G20YEA & G20YEA Summit Australia 2014
The G20 Young Entrepreneurs’ Alliance is a collective of leading entrepreneurially-minded organizations representing the G20 countries who seek to promote youth entrepreneurship as a powerful driver of economic renewal, job creation, innovation and social change. The G20 YEA provides advice to G20 political leaders in best practices to support youth entrepreneurship through policy recommendations and sharing best practices in the areas of access to funding, coordinating support initiatives, enhancing the entrepreneurship culture, regulation and taxation, and education and training.
Now ready for it’s 5th anniversary, the G20 YEA Summit Australia will bring together over 500 entrepreneurs under the age of 40 from the G20 nations, and hundreds of entrepreneurs from guest countries, to champion the importance of entrepreneurship and examine the issues impeding it. Discussion points from the G20YEA Summit will be presented to world leaders throughout the year, and during the G20 Leaders Summit.
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