Global Entrepreneurship Monitor: Obtaining Finance is Particularly Difficult for SMEs

GEM ReportThe Global Entrepreneurship Monitor (GEM) report on Entrepreneurial Financing was published earlier this month. The document is a global snapshot on the state of entrepreneurial endeavors around the world. Produced by a team of researchers from Babson, Oxford and the University of South Africa, Capetown, this recent study affirms that the financial crises had a profound effect on the economic and entrepreneurial landscape. Unfortunately, new obstacles have been created and access to finance is “one of the most serious problems for business in many economies:

“Obtaining finance is particularly difficult for small and medium enterprises.”

The authors note that crowdfunding has emerged as a popular alternative to traditional friends & family, angels, and VCs.

While governments and investors are becoming increasingly supportive of fostering entrepreneurial ecosystems, “the challenge going forward in the global economy is to develop an entrepreneurial capability and infrastructure in every economy to enable economic success.”

Babson College Professor of Entrepreneurship, Donna Kelley, stated;

“Startup activity benefits from widespread recognition of the role entrepreneurship plays in increasing employment and improving the economic health of the nation.”

According to the GEM report, all entrepreneurs, on average, drew funding from:

  • Banks (36 percent);
  • Family (24 percent);
  • Private equity or venture capital (24 percent);
  • Government (22 percent);
  • Employers or work colleagues (16 percent);
  • Friends (15 percent), and
  • Crowdfunding platforms (12 percent)

A concerning fact was that the data indicated total entrepreneurial activity in the US declined by two percent in 2015 (12%), reversing a four-year trend of increasing rates.  Fewer people were choosing to shoulder the risk and become entrepreneurs.

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