Megatrends are large, transformative global forces that define the future. At EY we have identified six megatrends, including one megatrend, Entrepreneurship Rising that we believe has the potential to disrupt and shape the world. Here we will take a deeper dive into Entrepreneurship Rising.
While some entrepreneurial activity around the world is still driven by necessity, “high impact” entrepreneurship, once largely confined to mature markets, is now an essential driver of economic expansion in rapid-growth markets. In some cases, these high impact entrepreneurs are building innovative and scalable enterprises that capitalise on local needs and serve as role models for new entrepreneurs.
The face of entrepreneurship is also changing — across the world, entrepreneurs are increasingly young and/or female. Many of these new enterprises are digital from birth. Access to funding remains the primary obstacle for entrepreneurs from all markets.
The public and private sectors each have an important role to play in creating entrepreneurial ecosystems that, in addition to funding, are essential for promoting entrepreneurial success.
6 key aspects of megatrend, Entrepreneurship Rising
1. The drivers of entrepreneurial activity in rapid-growth markets are moving from necessity to opportunity
Rapid-growth markets have long had high rates of entrepreneurial activity because businesses were launched out of necessity, driven by poverty and a lack of wage-based opportunities. However, economic growth and rising wealth in these markets are fomenting an increase in the number of start-ups designed to pursue a specific commercial opportunity.
2. High-impact entrepreneurs will continue to build transformative businesses in both rapid-growth and mature markets
Mature markets have seen numerous start-ups with great ideas scale and take off. Increasingly, these “high impact” and disruptive entrepreneurs are emerging from rapid growth markets, in many cases making a name for themselves with frugal innovation — offering lower-cost products and services tailored to unmet and local market needs.
3. The face of entrepreneurship is increasingly young
High rates of youth unemployment in many G20 countries, as well as changing work and lifestyle preferences, are creating a new class of young entrepreneurs. However, to reach full potential, these young entrepreneurs need additional support, including new funding alternatives and mentoring help.
4. The face of entrepreneurship is increasingly female
Women across the world are launching and operating new enterprises at an ever faster pace. However, they face the hurdle of accessing capital in disproportionate numbers to men. This is true in countries where financial markets are less developed and in countries with sophisticated entrepreneurial systems, putting the onus on policymakers and other stakeholders to create enabling environments for women that increase the chance for success.
5. More supportive environments are evolving to underpin entrepreneurial growth
Across the G20, greater thought is being given to the business and cultural factors needed to foster an ideal entrepreneurial environment. Access to funding is just one dimension. A truly entrepreneurial environment also requires the following:
- An entrepreneurial culture
- Supportive regulatory and tax regimes
- Educational systems that support entrepreneurial mindset
- A coordinated approach that links the public, private and voluntary sectors
6. Access to funding remains the biggest hurdle — a range of funding options is essential
Entrepreneurs themselves highlight funding shortfalls in launching and scaling new businesses as the area where improvements are most urgently needed. While the venture capital industry continues to globalise, governments and markets are exploring a range of financing mechanisms, including micro financing, crowdfunding, and credit guarantee schemes to provide capital to entrepreneurs.
The views expressed in this article are the views of the author, not Ernst & Young. This article provides general information, does not constitute advice and should not be relied on as such. Professional advice should be sought prior to any action being taken in reliance on any of the information.