At global level, 95 percent of entrepreneurs rely on their own equity to run a start-up, while in Romania this figure climbs to 98 percent.
„The recent financial crisis, the hardest one from the last 80 years, had a profound effect on the economic life as well as on the entrepreneurial environment. Even if the the average cost of a startup dropped, the financing access remains one of the most serious problems that the firms from many countries confront with, especially the SMEs, ” say the authors Caroline Daniels, Mike Herrington and Penny Kew.
Israel and Spain, using 79 percent own equity report the lowest percent of entrepreneurs that use this source o financing. At the same time, the own investments ratio varies very much, from a minimum of 47 percent in Burkino Faso and Senegal, to 98 percent in Indonesia. At global level, this ratio has grown also in average: if in 2004 the entrepreneurs supplied 66 percent of the business capital, in 2015 they contribute with up to 72 percent. The Romanian entrepreneurs contribute with their own money to cover in average 66 percent of the budget of the startup.
„This thing indicates a stronger feeling of autonomy, in the current economic environment,” says Herrington.
He thinks that their own resources usage, sometimes called “bootstrapping” comes from necessity, when the entrepreneurs cannot obtain an external finance. „This thing is valid especially for the female entrepreneurs who confront with an unequal treatment from the traditional creditors, both in developed and developing countries, ”
Almost 60 economies attended the annual research of GEM. This type of report, based on the collected data during the annual research cycle was launched 10 years ago. Since then, the funds availability, the financing sources, as well as the costs of a running a startup have evolved.
„For many entrepreneurs, their own equities, as well as the contributions from the neighbors, family and friends played an important role, the investments from outside these circles were bigger.”
„In all the regions, the most informal investors offer funds to the family members, while a substantial percent offer funds to their friends and family,” concludes Kew. (source: business-review.eu)