Girl power boosting new global businesses
In my view, the first proposition is correct. Entrepreneurs are critical to our future growth and prosperity. And they need to be both driven, and a bit eccentric, to survive the harsh realities of entrepreneurship.
A key finding of "Mega trends that will shape our future", a study recently released by EY, is that the growth and prosperity of all economies, rapid-growth and mature, remains highly dependent on entrepreneurial activity.
Entrepreneurs are the lifeblood of economic growth. They provide a source of income and employment for themselves, create employment for others, produce new and innovative products or services, and drive greater upstream and downstream value-chain activities, the report says.
Another observation is that the face of entrepreneurship is changing. Entrepreneurs are increasingly young and female. Nearly 50 per cent of the world's entrepreneurs are aged between 25 and 44, with 57 per cent of China's entrepreneurs being between 25-34.
Whether this is in response to woeful youth unemployment figures, or because this group does not want to be shackled by corporate life, is an open question. But with almost 13 per cent of young people - nearly 75 million - unemployed globally, the combination of youth and entrepreneurship is something we must desperately encourage.
About 126 million women are launching or operating new businesses in 67 economies around the world. The World Bank reports women-owned companies in the US are expanding at more than double the rate of other firms. They comprise 19 per cent of the US economy and are directly responsible for 16 per cent of all the jobs.
Despite this, funding and real government support is sadly lacking. There are no special tax breaks or funding assistance for entrepreneurial companies, and most of the public and private sector support is tailored for the larger players.
How many New Zealand-based start-ups with great ideas have failed to get off the starting blocks, or have been sold to overseas buyers before they could grow and become an economic force?
Large corporates struggle to offer low-cost products and services, and rarely engage in frugal innovation in the way entrepreneurial companies do. Yet these large corporates have excess capital or borrowing capacity. So why not provide tax incentives for them to be an innovation hub and funder for these entrepreneurial companies?
The statistics show female-owned business are less likely to get venture capital funding. Male-owned business are four times more likely to receive it.
The challenge for policy makers and stakeholders is to figure out how we can create a climate that fosters and funds entrepreneurism. This should start with five pillars: access to funding, driving an entrepreneurial culture, regulatory and tax regimes that do not choke the life out of businesses, education systems that encourage and support entrepreneurial mindsets, and a coordinated approach which links the public, private and voluntary sectors supporting entrepreneurs.
Is this all pie in the sky? For start-ups, a grant of $200,000 would be like a million-dollar Lotto win, and would ease that constant concern about where the next dollar was coming from to pay staff or outstanding bills. We can also learn from our closest trading partner, China, where entrepreneurial ventures are said to be responsible for 75 per cent of new jobs created each year, and 68 per cent of the country's exports.