Education and financial access: key ingredients for entrepreneurship success
Jared Penner, Manager of Global Engagement and Evaluation, CYFI
In addition to its effect on confidence in European financial markets, the 2008 economic downturn also shook the already weak confidence Europe had in entrepreneurship. In 2010, only 28.1 % of Europeans thought it was feasible to start a business within the next 5 years (a figure which dropped from 31.4% in 2007). However, in 2014, 99% of European private enterprises were micro, small and medium-sized businesses (MSMEs). In the past five years, they have created around 85% of new jobs and provided two-thirds of the total private sector employment in the EU.
Given Europe’s numerous social and economic problems, resulting mostly from ongoing youth unemployment, entrepreneurship remains a powerful strategy to create jobs and provide meaningful and sustainable livelihoods for younger generations. The European Commission, along with local governments, private companies and educational institutions, have become increasingly active in promoting strategies and programmes that stimulate Europe’s entrepreneurial spirit, while nurturing important entrepreneurship skills and confidence amongst youth.
Nevertheless, there remains a low rate of entrepreneurial activity among young people in Europe. This can be attributed to a number of factors including: a lack of basic business management knowledge, ignorance of essential start-up information at the country level, cumbersome bureaucracy, and high start-up taxation, difficulty in securing sufficient financing or investment opportunities and a prevailing fear of failure.
Young entrepreneurs can benefit from education through both formal and non-formal channels. While many European countries have introduced entrepreneurship education into primary and secondary schools through cross-curricular or separate course offerings, these are often not mandatory subjects or do not reach students in an engaging manner. Despite the reality that youth self-employment remains rare, recent studies from the show that students who complete formal entrepreneurship courses in school are “at least 20% more likely than other students to engage in entrepreneurship in the early part of their careers.”
Non-formal entrepreneurship training (i.e. outside the formal school curriculum) is another effective method to support young entrepreneurs and is being delivered by an increasing number of non-governmental organizations and networks across Europe such as Junior Achievement, JADE, JEUNE, CIADE and YES. These programmes provide young people with the practical experience to develop entrepreneurial skills and observe business operations on a first-hand basis. This allows them to engage with inspiring entrepreneurs and hear stories of both success and failure; both these narratives can serve them well in the future, even if they never go on to establish their own microenterprises. Moreover, the notion that youngsters should have an entrepreneurial experience before leaving school is consistent with the European Commission’s Entrepreneurship Action Plan 2020.
While access to education remains central to the development of Europe’s entrepreneurial culture, the inability of young people to access finance remains an important barrier to the development of youth enterprise. The Flash Eurobarometer, Entrepreneurship in the EU and Beyond, found that a lack of finance was the most important reason respondents were sceptical of starting their own business, with 24% citing it as a factor. Entrepreneurship is by definition risky, and a common complaint among entrepreneurs is that investment opportunities are hard to come by. A fact even more relevant for young entrepreneurs, who are perceived as a riskier investment due to their inexperience. Strategies for overcoming these barriers to finance for young entrepreneurs include public guarantee schemes, government tax incentives and innovative crowdfunding platforms.
Child & Youth Finance International (CYFI) is committed to advancing youth entrepreneurship through an integrated approach, which combines education, logistical support and access to financial resources. Through CYFI’s online Ye! Platform, young entrepreneurs worldwide aged 16 to 30 can benefit from coaching and mentorship from experienced professionals, and gain detailed information for starting and running a business in their country. Ye! also organizes offline trainings and workshops through our Boost Camp programme. In an effort to provide more direct financing and investment opportunities for young entrepreneurs in the Ye! Community, CYFI is also planning to launch an impact investment fund focusing on a number of countries in Europe and Africa. Through this initiative, young entrepreneurs will be able to access funding opportunities only after a training and selection process, to ensure that they are prepared for the investment process.
By combining access to finance with entrepreneurship education, the challenges facing both investors and young entrepreneurs can be addressed, thereby increasing the likelihood of youth-led enterprises surviving, growing, and employing more youth. Education and training providers across Europe should work towards better access to finance and skills-building, so that together we can foster a more supportive environment for youth entrepreneurship.
Credits to: Philip Harris, CYFI Entrepreneurship CoordinatorCategory : entrepreneurship education, fiancial literacy Posted : 11 December 2015 13:12 UTC