Access to funding top imperative for G20 entrepreneurs
London and Moscow, 17 June 2013
As economic recovery remains fragile in many G20 countries and youth unemployment levels continue to rise, Governments are increasingly looking to entrepreneurs and start-ups to kick-start economies and provide sustainable growth. The EY Avoiding a Lost Generation report surveys 1,500 entrepreneurs, including 1,000 under 40 year old ‘young entrepreneurs’, across the G20 countries to identify five imperatives for Government action to support young entrepreneurs, create jobs and sustain growth. Launched at the Young Entrepreneurs Alliance Summit in Moscow, the report is presented in advance of the EY G20 Barometer, released later this year.
- 73% entrepreneurs surveyed across the G20 highlight expansion of funding alternatives as foremost imperative for government action
- Change of culture to tolerate failure cited a high priority for entrepreneurs
- 53% entrepreneurs surveyed believe governments need to create a simpler SME friendly tax and regulatory environment
“At a time when society’s biggest issue is youth unemployment, businesses and Governments must work together to help young people develop an entrepreneurial mindset. This means fostering a culture which supports young people to take risks, set up businesses, create jobs and become masters of their own destiny” says Maria Pinelli, EY’s Global Vice-Chair of Strategic Growth Markets.
Tackling youth unemployment
With agencies predicting that almost 13% or the world’s youth, close to 75 million young people, are unemployed. In parts of Europe, youth unemployment rates have risen well above 30%. With entrepreneurs and SMEs representing on average two-thirds of G20 employment, providing young entrepreneurs with the tools and support they need is a critical component to tackling the youth unemployment crisis.
“Entrepreneurship and innovation are essential for increasing economic competitiveness and paving the way for growth and job creation. It is vital for governments to understand the specific challenges facing entrepreneurs and collaborate to solve problems, address legislative and cultural barriers to success, and together shape the future of entrepreneurship” says Uschi Schreiber, EY’s Global Government Public Sector Leader.
Funding and skills
In the EY survey, respondents identify five key imperatives for action to improve government support for entrepreneurs. Expanding the choice of funding alternatives for entrepreneurs is cited as the foremost imperative, with 73% of respondents agreeing that access to funding remains difficult, particularly for those seeking to develop a new type of product or service. Whilst traditional funding such as business angels, private equity and venture capital remain more limited for entrepreneurs, there is a higher demand for non-traditional funding, such as crowd-funding and microfinance, especially amongst female entrepreneurs.
There is a need for increased mentoring and broader support for entrepreneurs in order to provide knowledge and skills required to spend capital effectively. This means developing stronger support ecosystems, with 36% of respondents suggesting that business incubators would most improve the long-term growth of entrepreneurship, 36% agreeing Government start-up programmes would improve success, and 32% believing entrepreneur clubs and associations will be most beneficial.
Changing culture and regulation
Respondents also cite a need to change public perception of entrepreneurship and change culture to tolerate failure. This includes Governments promoting entrepreneurs as crucial job creators, and educating people about entrepreneurship, with 51% agreeing that Governments need to highlight the success stories and role models in schools and universities to help students look to make career choices.
Currently, the G20 provide many government leading practices designed to boost SMEs and this effort has not gone un-noticed with 27% of respondents recognise progress in tax incentives, while 38% reporting improvements in innovation incentives. However, a high priority for entrepreneurs is to target and speed-up Government incentives.
More than one in two (53%) entrepreneurs believe governments need to reduce red tape and excessive taxation, creating a simpler, SME-friendly business environment to boost their efforts. With entrepreneurs struggling to get to grips with tax and regulation designed for older, more established business, 33% believe that the development of a single government agency to help new business with regulation would do the most to help.
Maria Pinelli concludes, “Whether it’s through finance, mentoring, incentives or training, we must all play our part so that this generation can achieve its full potential. The time to act is now”.
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