The Definitive Study of Entrepreneurship in 2004
73 million people across the globe are either nascent entrepreneurs, or own or manage a young business, according to the sixth annual Global Entrepreneurship Monitor. Directed by London Business School and Babson College and released today, the report is the largest annual measure of entrepreneurial activity worldwide, spanning 34 countries and a total labour force of 784 million people.
New this year, the GEM Global Report demonstrates a U-shaped relationship between Total Entrepreneurship Activity (TEA) and per capita Gross Domestic Product (GDP).
Entrepreneurial activity declines as countries attain higher national income, reaching its lowest point at about US $30,000 per capita GDP. Beyond that level, TEA begins rising slowly and steadily as GDP continues to rise. For example, Uganda, Peru and Ecuador have high TEA rates but low national incomes whereas the United States and Iceland have both high TEA rates and high national incomes. A key implication of these results is that when it comes to entrepreneurship, one size does not fit all. Policies must be adapted to fit prevailing national circumstances.
Furthermore, the GEM Financing Report reveals that it is self-funding and informal investment that is the lifeblood of an entrepreneurial society. 99.9 percent of nascent entrepreneurs launch new ventures without formal venture capital or business angel investments. Entrepreneurs themselves provide 65.8 percent of the start-up capital; hence others, principally informal investors, provide the remaining 34.2 percent. An overwhelming 88 percent of America's 500 fastest growing private companies never received financing from business angels.
In contrast, 33 percent of the same 500 companies raised start-up capital 'by tapping the assets of family and friends'.
William D Bygrave, Frederic C Hamilton Professor for Free Enterprise, Babson College and lead researcher of the GEM Financing Report said, "Entrepreneurs seeking capital to start a business must first use their own savings, then turn to family members, next friends, work colleagues, and neighbours and finally strangers for informal investment. They should forget about formal venture capital."
Michael Hay, Deputy Dean and Secretary of London Business School and Co-Director of the GEM Global Project said, "This year's GEM Global report has developed an even better understanding of the place of entrepreneurship in driving the performance of countries across the world. We can say with certainty that entrepreneurship, while different from country to country, is just as important in the developing countries as in the developed ones. Given the current focus on rebuilding and regenerating the tsunami-struck nations and many African nations, we cannot afford to ignore the role of entrepreneurship in driving inclusive economic development for all."
More about the study:
New this year, the GEM Global Report demonstrates a U-shaped relationship between Total Entrepreneurship Activity (TEA) and per capita Gross Domestic Product (GDP).
Entrepreneurial activity declines as countries attain higher national income, reaching its lowest point at about US $30,000 per capita GDP. Beyond that level, TEA begins rising slowly and steadily as GDP continues to rise. For example, Uganda, Peru and Ecuador have high TEA rates but low national incomes whereas the United States and Iceland have both high TEA rates and high national incomes. A key implication of these results is that when it comes to entrepreneurship, one size does not fit all. Policies must be adapted to fit prevailing national circumstances.
Furthermore, the GEM Financing Report reveals that it is self-funding and informal investment that is the lifeblood of an entrepreneurial society. 99.9 percent of nascent entrepreneurs launch new ventures without formal venture capital or business angel investments. Entrepreneurs themselves provide 65.8 percent of the start-up capital; hence others, principally informal investors, provide the remaining 34.2 percent. An overwhelming 88 percent of America's 500 fastest growing private companies never received financing from business angels.
In contrast, 33 percent of the same 500 companies raised start-up capital 'by tapping the assets of family and friends'.
William D Bygrave, Frederic C Hamilton Professor for Free Enterprise, Babson College and lead researcher of the GEM Financing Report said, "Entrepreneurs seeking capital to start a business must first use their own savings, then turn to family members, next friends, work colleagues, and neighbours and finally strangers for informal investment. They should forget about formal venture capital."
Michael Hay, Deputy Dean and Secretary of London Business School and Co-Director of the GEM Global Project said, "This year's GEM Global report has developed an even better understanding of the place of entrepreneurship in driving the performance of countries across the world. We can say with certainty that entrepreneurship, while different from country to country, is just as important in the developing countries as in the developed ones. Given the current focus on rebuilding and regenerating the tsunami-struck nations and many African nations, we cannot afford to ignore the role of entrepreneurship in driving inclusive economic development for all."
More about the study: