Romanian entrepreneurs are looking for funding but also want to remain independent when taking business decisions
Improving access to funding for companies is one of the most important levers through which entrepreneurship can be sustained in Romania and globally. Young Romanian entrepreneurs who have businesses with revenues up to EUR 1m believe that it’s difficult to obtain funding in Romania. However, according to EY Romania’s study – Entrepreneurs perception on access to funding, the decisive factor in choosing the source of funding is remaining independent when taking business decisions.
The study examines the perceptions of 107 Romanian entrepreneurs who answered the EY survey between 22 August - 18 September, 59% of them being under the age of 40 and 74% owning companies with revenues under EUR 1m.
The vast majority (75%) of entrepreneurs who answered the survey consider that the authorities do not facilitate access to funding for companies, unlike 8% of which mention that there is government support in this regard. Among the areas that the government should focus on to improve access to funding, entrepreneurs underlined: tax incentives for investment in small businesses (34 responses), promoting efficient and equitable labor laws (27), simplified and more efficient business regulatory systems (25) and providing funds for financing schemes (20).
The vast majority of young Romanian entrepreneurs are turning to bank credit, but also take into account other funding sources such as EU funds and joint ventures with business partners. Most entrepreneurs need funding for investment (49%), for working capital (20%) and for new start-up projects (20%).
"According to the EY study, entrepreneurs believe that the business plan is the most important in obtaining funding (36% of interviewed entrepreneurs). After the business plan, according to the importance perceived by entrepreneurs stand the team and previous business experience (27%) and the guarantees that are offered (14%). Also, the critical factor for entrepreneurs in choosing a funding source is maintaining their independence when taking business decisions (30% of entrepreneurs), followed in second place by the lowest cost (29%) and third, the guarantees required (17%)", says Mihai Pop, Manager within Transaction Advisory Services department, EY Romania.
41% of entrepreneurs confirm that they received funding in the past year, and nearly one in three obtained funding in the last six months - a very good rate in the context of reduced funding opportunities in the past years. The amounts were, however, often small, 44% of respondents stating that they received funding under EUR 25,000.
Sectors that entrepreneurs consider to be the most easily funded are IT and online (39%), agriculture (21%) and green energy (13%).
"Entrepreneurs drive the economy forward and create jobs, therefore they deserve all the support they can get. Perhaps now the most important resource for many of them consists in the good funding options. Through this study we wanted to observe their views on this aspect, especially the views of entrepreneurs at the beginning of their journey, though not only them. The bottom line is that entrepreneurs are increasingly informed about funding options, including angel investors, venture capital, European funds and even crowdfunding. We also noticed optimism among the entrepreneurs, 48% having positive expectations from the funding environment in Romania in the coming years." says Mihaela Matei, Supervising Marketing Specialist, EY Romania, and coordinator of the annual EY study Entrepreneurs speak out - Entrepreneurship Barometer.