G20 Funding the future
Access to finance for G20 entrepreneurs
Entrepreneurs cannot rely on bank finance to be available at every stage of the business cycle.
Access to finance remains a critical barrier to the success of entrepreneurial businesses. Among the entrepreneurs surveyed, almost two-thirds say that they find access to finance difficult in their country.
Across every G20 country, a crucial factor that will determine the success of entrepreneurship is access to finance. Without the ability to secure funding, entrepreneurial companies will be unable to reach their growth potential and may not survive at all. One of the crucial requirements for an environment in which entrepreneurship can flourish is a financial system that supports entrepreneurs by expanding both traditional and innovative forms of lending.
We believe that if governments can help promote a best-case scenario, in which new forms of lending expand rapidly and traditional lending grows faster than GDP, then by 2020 the financial system might be able to support double today's number of SMEs.
In this report we analyzes the opportunities and issues around access to finance for entrepreneurs in the G20 markets. and provide recommendations for action that could be taken by entrepreneurs and governments at each of the four stages of entrepreneurial development:
- Access to funding remains difficult, though opportunities in rapid-growth markets have improved, albeit from a low base.
- Access to finance at the seed and pre-seed stages remains extremely challenging; but market solutions such as crowdfunding are emerging.
- Business angels are becoming a more important source of finance for promising start-ups and government needs to provide support through tax incentives or matching funding.
- Credit guarantee schemes are an important way of keeping bank lending windows open.
- Corporate venturing could re-emerge as a powerful complement to traditional Venture Capital (VC) funding as businesses look to tap into the dynamism of fast growth businesses.
- In developed markets such as the US, regulatory change could help to unblock IPO markets and stimulate funding by opening up more exit options.
- In rapid-growth markets, private equity (PE) is becoming a viable financing option for smaller entrepreneurial businesses.
- Governments should consider policies that target entrepreneurs with the greatest impact whilst providing broader support for the whole entrepreneurial community.
Select your country for more insights: