Framework Conditions). Such factors include training in that different countries and regions have different EFCs entrepreneurship and the availability of start-up financing” or different “rules of the game,”11 and that these affect the inputs and outputs of entrepreneurial activity. The origi(p. 10). ecosystem | who’s got VC | Q&A | STARTUP FINANCE nal and revised GEM conceptual frameworks established a clear relationship between the EFCs, entrepreneurship
start it up
FIGURE 3.1 MODEL OF ENTREPRENEURIAL PROCESSES AFFECTING NATIONAL model of entrepreneurial processes affecting national economy growth ECONOMY GROWTH Entrepreneurial Opportunities
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Social, Cultural, Political, context
Entrepreneurial Framework Conditions
Business Dynamics
National Economic Growth (GDP, Jobs)
Entrepreneurial Capacity and Preferences Source: Reynolds, Hay and Camp (1999)
imperative that governments, to help small enterprises policymakers and business become tax-paying members asofother topics related to entrepreneurship. The NEStogether was 12 . leaders come to supthe formal economy initiated due to a lack of nationally harmonized measuresentrepreIn many countries, Credit port and advance that could beSchemes utilized as(CGS) indices of specific EFCs (Reynolds neurship, which has proven to Guarantee etare al.,used 2005). While more recently other sources provide be essential to socioeconomic by banks, often with alternative measures for some EFCs,12development the NES remains the worldwide, public sector support, to ease sole source of harmonized, internationally comparable data especially in a country such the constraints SMEs face in that really addresses the environmentas forJordan new and growing that has massive accessing finance. Governfirms. ment startup programs have entrepreneurial potential and Survey. become some of the most depends almost entirely on investors to focus more on The NES was carefully designed and refined developing fund mentorvaluable sources of help. SMEs to to capture grow its national startups through improved informed judgments of national, and in some cases 3.2 THE GEM NATIONAL EXPERTS ing programs that establish Public money is a powerful economy. tax incentives. Furthermore, informants when regarding the status of EFCs SURVEY with and alternative funding platforms, regional, strong relationships catalyst,key particularly indelivered their ownin economies and/or regions. and In National many countries, Credit provide incentives from venpartnership with such as crowdfunding and regional experts are selected on the basis of reputation and (CGS) are The National Experts Survey (NES) is part of the standard Guarantee Schemes ture capitalists, incubators, private sector funds. Corpomicrofinance, are gaining experience (a convenience sample approach). The NES used by banks, often with GEM methodology and it assesses various EFCs as earlywell rate venturing also continues loan guarantee schemes and traction for seed and public sector support, to ease to grow, with almost 1,000 angel investors10. stage companies, but require the constraints SMEs face in units worldwide and becom- activity regulatory support tothe achieve 11 These EFCs could be related to Baumol´s concept of “rules of game” that determine to what extent entrepreneurial in a given finance. society is Governaccessing Specialized financing ing more widespread in rapid- ment startup programs have scale. productive (Baumol, 1990). 12 For NES results and linkage of EFCsThe with other international measurements, see Bosma etmarkets al. (2008). 13. options growth global microfinance become some of the most valuWhile the venture capital inMore than ever before, it is market also has the potential able sources of help. dustry continues to globalize, governments and markets are Waddah Barkawi is the Office Managing Partner for EY Libya and EY Palestine, exploring a range of financing and one of the Partners at EY Jordan working with clients in both Jordan and strategies to provide capital Iraq. Barkawi is the ‘EY Entrepreneur of the Year’ Country Leader for Jordan, to entrepreneurs, including and joined EY in 2002 following his tenure at Arthur Anderson. He has worked micro financing, crowdfundclosely with several regional banks and investment companies in Jordan, Palestine, Libya and Iraq, in addition to multiple government organizations, ing and credit guarantee telcos, power and utilities companies, service providers and many others, and schemes. has extensive experience working in the aviation and life science sectors as well Along with failure to be as family businesses and entrepreneurs. Barkawi holds a Bachelor’s degree in profitable, lack of funding is Business Administration with concentration in Management from Southwest Texas State University and is a U.S. Certified Public Accountant, a member of cited as the primary reason the American Institute for Certified Public Accountants and a member of the for business discontinuance Endeavor Jordan Board of Directors. Barkawi was appointed by His Majesty around the world11. As entreKing Abdullah II as a member of the Royal Committee, which is responsible preneurial businesses grow for assessing and overseeing the progress being made regarding the Executive and develop, the sources of Plan of the National Integrity Charter. finance they rely on change. smart governments are creating a range of mechanisms As such, smart governThe EFCstocan be considered an indispensable part of and institutions extend to ments are creating a range of entrepreneurs financing opthe puzzle in understanding business creation. The state mechanisms and institutions tions that meet these changof these conditions directly influences existence of to extend the to entrepreneurs ing requirements. They are entrepreneurial opportunities and entrepreneurial capacity financing options that meet establishing targeted venture and preferences, which in turn determines business these changing requirements. capital funds and encouraging dynamics. That is why, sinceThey the beginning, the GEMtargeted are establishing private sector investors to foproject needed a source of information to assess theand state venture capital funds cus more on startups through oftax EFCs. This source of information is the National Experts improved incentives. encouraging private sector
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EY - Avoiding a Lost Generation: Ten Key Recommendations to Support Youth Entrepreneurship across the G20 Global Entrepreneurship Monitor 2013 Global Report Microfinance Market Outlook 2015: Growth driven by vast market potential, responsibility, November 2014. Toby Lewis, Corporate venturing participants near 1,000 Global Corporate Venturing website, 9 April 2013, www. globalcorporateventuring.com/article. php/6001/corporate-venturing-participantsnear- 1000, accessed 8 January 2015.
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