• EY G20 Entrepreneurship Barometer 2013 highlights Australia, Canada, South Korea, UK and US as entrepreneurial hot spots
• Significant variations in entrepreneurial funding, culture, tax and regulation, education and training, and support across G20 nations
• 83% of entrepreneurs agree an innovation focused tax incentive would improve entrepreneurship in their countries
• Access to finance at different stages of growth remains a primary concern for 70% of entrepreneurs

London, Kyiv, 6September 2013 With many countries continuing toface high levels of unemployment and challenges in economic growth, EY’s G20Entrepreneurship Barometer 2013calls on governments, in line with the G20Leaders Summit, to collaborate with entrepreneurs in order to kick-start theireconomies and create jobs. The barometer follows the EY report, Avoiding aLost Generation, which was launched at the Young Entrepreneurs AllianceSummit in Moscow in June.

Uschi Schreiber, EY’sGlobal Government Public Sector and Global Markets Leader comments:

“Despite theirdifferences, there are many common challenges for entrepreneurs and governmentsacross the G20. For most countries the agenda remains closely focused on jobcreation and the barometer highlights that there are things the public andprivate sector can do simply by learning from each other.

“Easier accessto funding, simplified regulation and taxes, and bolstered education andtraining, have already helped to improve the entrepreneurial ecosystem in manycountries and governments are already closely connected. But they need toexchange best practices and avoid any pitfalls or unintended consequences thatothers have already encountered.”

Launched aheadof the G20 Leaders Summit in St Petersburg, the EY G20 Entrepreneurship Barometer 2013 is a new way ofranking every G20 country across five “pillars” of the entrepreneurialecosystem: access to funding, entrepreneurship culture, tax and regulation,education and training, and coordinated support. The barometer is based on asurvey of over 1,500 leading entrepreneurs and qualitative data onentrepreneurial conditions across the G20. It also draws extensively on EY’sown research of more than 200 government leading practices

The barometerprovides more than 40 key recommendations for governments, entrepreneurs andcorporations to improve the conditions for entrepreneurship to stimulate growthand jobs.

Mature countries leading the way butrapid-growth markets are catching up
Across the G20, mature countries score highest overall on the barometer forproviding the best ecosystems for entrepreneurship. When ranked across all fivecategories, Australia, Canada, South Korea, UK and US lead the G20 in the upperquartile. The US leads the barometer in terms of access to funding andentrepreneurship culture and France is top for education and training. However,rapid-growth markets are closing the gap and making the fastest improvements totheir entrepreneurial environments. Saudi Arabia is perceived to be the mostattractive in terms of tax and regulation due to its low corporate tax ratesand simplified regulations. Within the final pillar, providing “coordinatedsupport”, including mentoring and peer to peer networks, Russia scores highest,followed by Mexico and Brazil. See the table below for more details.

Job creation and youth unemployment
Entrepreneurs represent two third of employment in the G20 and they are acritical engine for job creation, including youth employment. Across the EU itwas estimated that entrepreneurs supplied 67% of all new jobs last year, whilein China the figure was even higher at 75%. Maria Pinelli, EY’s GlobalVice-Chair, Strategic Growth Markets explains how job creation can bereinforced,

“In order forG20 governments to continue to stimulate job creation there is a need tosupport entrepreneurship by attracting migrant entrepreneurs as truly globaltalent base, treating women entrepreneurs as a major market in their own right,and incentivizing young entrepreneurs. Entrepreneurs have the power to createjobs and drive growth — but first we need to give them the tools andenvironment that will enable them to succeed.”

Access to funding top priority forglobal action
Access to funding is cited as the top priority for global action by 70% ofentrepreneurs, who agree that obtaining finance remains difficult as theirbusinesses grow and develop, and the sources of finance they rely on changes.The barometer highlights that governments should create a range of mechanismsand institutions that provide entrepreneurs with capital at every stage ofgrowth, alongside providing support and mentoring, which is essential to enableentrepreneurs to use this capital effectively.

The US rankshighest overall for providing access to funding, followed by UK and China, witha varied mix of developed and emerging markets following in the subsequentranking order. While in the US only 15% of entrepreneurs report that it is verydifficult to find funding, in countries such as Italy and Argentina this figureis much higher at 45% and 40%, respectively.

Access toearly-stage funding is starting to improve, with the US, Canada and Australiaas well as Saudi Arabia and Indonesia performing well in providing funding forstart-ups. Further innovation is required to broaden the early-stage fundingeco-system. This includes large corporates venturing sources of funding toboost their own innovation pipelines while supporting entrepreneurial business.

Companieswould also benefit significantly from relief on indirect taxes which oftenserve as a fixed overhead expense Eighty-three percent of entrepreneurs agreethat an innovation focused tax incentive would improve entrepreneurship intheir countries. For example, in Canada, entrepreneurs can recover 50% of alltheir research and developments’ expenses, regardless of profit or loss.

Pinelli says,“Given the scale of this problem in certain markets in particular governmentshave to be innovative. Entrepreneurs are looking to their governments toincentivize new sources of funding whether it is unlocking bank lending toentrepreneurs, providing public funds, crowdsourcing or microfinance. Beingcreative can be a demonstrable success – nearly half of the entrepreneurs whoare aware of crowd funding agree that it has improved their country.”

Call to action for governments
Alongside financial improvements, there is a clear message from entrepreneursfrom G20 nations for cultural change in order to remove the stigma of failure,champion entrepreneurship, promote united thinking in policy and businessenvironments, and co-ordinate support across private, public and voluntarysectors. US entrepreneurs have a relatively low fear of failure. In fact, 43%of US entrepreneurs surveyed see business failure as a learning opportunity,which compares to the G20 average of 23%. Relatively low insolvencyimplications also support US entrepreneurs in trying new ventures. In order tobetter understand the challenges ahead, the report also advises governments toconduct a self-assessment of their own entrepreneurial landscape to ensure thatthe correct funding strategies and policy levers are in place.

Schreiberconcludes: “The message is clear – governments, entrepreneurs and corporateshave to work together to spur growth across the G20. For governments, there isa clear call to action to both improve financial and regulatory environments tobetter support entrepreneurship but also to do more to encourage anentrepreneurial culture. As well as directly boosting access to funding publicpolicy also needs to consider a more long term holistic approach to innovationand enterprise.”

The EY G20Entrepreneurship Barometer: overall results

Clickhere to view the table

For the EY guide to funding entrepreneurial businesses –see page 17 of the G20Entrepreneurship Barometer 2013

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