G20 Entrepreneurship Barometer 2013 UK-1

8/13/2019 G20 Entrepreneurship Barometer 2013 UK-1

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The power of threeTogether, governments, entrepreneurs and

corporations can spur growth across the G20

The EY G20 Entrepreneurship Barometer 2013


2/12

United Kingdom at a glance

Compared with many other G20 countries, the environment for entrepreneurs in the UK is afavorable one. New and growing ventures operate on a solid foundation of business-friendlyregulations, generous tax subsidies, good availability of skills from a solid education systemand the countrys dynamic nancial markets. All of this gives the country an edge and has led

to high levels of new business activity, relative to many other G20 economies.

Given the UKs difculties in tackling its high rate of

unemployment and low economic growth, supporting the growth

of fast-growing and innovative businesses is vital. Overall,entrepreneurial businesses account for 99.9% of all businesses in

the UK, and 59.1% of all employment, according to the Federation

of Small Businesses.1Crucially, these smaller businesses account

for two-thirds of all the new jobs created in the UK in an average

year, according to the University of Nottingham, which highlights

why it is important to foster and support their growth.2Of course,

few of these companies are the innovation-led high-tech start-ups

that gather the most headlines, but rapidly expanding companies

that deliver real and sustainable growth across a range of

sectors often dubbed the gazelles are what count most here.

The underlying preconditions for bolstering the UKs

entrepreneurial ecosystem are already well established.

For example, 71% of local entrepreneurs say that the countrys

culture is supportive of their efforts. Across the G20, only in

Japan is entrepreneurship encouraged more as a career choice.However, there is no room for complacency. British entrepreneurs

still face several tough challenges, especially in relation to funding.

The latest gures from the Bank of England suggest that bank

lending to smaller ventures contracted in 2012.3In the survey,

about three in four UK entrepreneurs reported that access to

bank loans has deteriorated over the past three years. Just 22%

feel that access to funding in the UK is easy, falling to just 11% for

those aged under 40. Despite the UKs nancial sophistication,

there are clear challenges in securing funding.

Furthermore, there are signs that the ongoing economic downturn

has led to a dip in the UKs performance on various innovation

Iain Wilkie

Strategic Growth MarketsLeader, UK&I, EY

Bjrn Conway

Government & Public SectorLeader, UK&I, EY

Solid entrepreneurial ecosystem butconcerns in some key areas

Key facts

Overall Barometer ranking Quartile 1

Population 63 million

GNI per capita (PPP) US$35,800

GDP growth 0.3%

Exports as % GDP 32.5%

Source: The World Bank, 2012

1 Small Business Statistics, Federation of Small Businesses website, fsb.org.uk, accessed 16 June 2013.

2 Small rms driving UK job creation, University of Nottingham website, nottingham.ac.uk, accessed 22 June 2013.

3 Bank of England, Trends in Lending: July 2013(Bank of England, 2013).

2 | The power of three


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Weaknesses

While access to funding is strong in the aggregate, efforts

to increase funding to small businesses have struggled.

Despite high levels of spending on education, there are

weaknesses in tertiary enrollment and in second-level

vocational education.

Asked whether coordinated support has been improving

or deteriorating, UK entrepreneurs are among the most

pessimistic in the G20.

Opportunities

The UKs strength as an innovation center gives it a strong

position in high value-added industries.

There is scope to boost direct support for exporters. In

2010, the UKs export credit agency provided nancial

support totaling 2.9b, almost none of which wentto entrepreneurial businesses. Its German equivalent

provided 32.5b, with 73% going to entrepreneurial

businesses, according to UK think tank Civitas.4

Threats

A growing number of indicators show signs of economic

recovery, but domestic demand may be fragile for some

time, particularly as real earnings have been falling for

ve years.5

Uncertainty continues to hang over the Eurozone,

a pivotal export market for the UK, although, moreencouragingly, the local UK economy appears to be

improving.

Strengths

The UK provides a business-friendly regulatory

framework and a tax system that is broadly supportive of

entrepreneurship.

The country boasts one of the strongest innovation

cultures in the G20, with high levels of R&D spending and

employment.

The nancial services sector is one of Europes largest,

and entrepreneurs enjoy solid access to growth and

expansion capital.

indicators, including the number of patents registered each year.

Close attention will need to be paid to ensure that this trend

is reversed. Nevertheless, the country remains an innovation

leader, with spending and employment on research and

development (R&D) both coming in well above the G20 average.As bets the countrys strong history of discovery, output of

scientic and technical journal articles is also high, at more than

double the G20 average.

SWOT analysis

An innovation leader, but with room for

improvement on nance and educationThe UK provides its entrepreneurs with a well-developed

ecosystem that continues to evolve in line with efforts to move

more new business activity up the value chain. The country has a

strong innovation base, and new tax incentives aim to boost the

commercialization of R&D in the country. From a tax perspective,

the UK is one of the few countries in the G20 that is actively

lowering its corporate tax rate in order to stimulate business

activity. However, access to funding for local ventures is cited

as an ongoing concern by entrepreneurs, in particular for small

businesses or those started up by younger owners.

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01

2

3

4

5

6

7

8

UK

Mature economies G20 average

Coordina

tedsu

pport

Educ

ationan

d

training

Taxa

ndregu

lation

Entrep

rene

ursh

ip

cultu

re

Access

tofund

ing

UKs pillar scores compared to mature G20 economies average

Source: EY G20 Entrepreneurship Barometer 2013

4 Proactive export policies needed to target critical emerging markets, Civitas website,

civitas.org.uk, accessed 27 June 2013.

5 B Maule and A Pugh, Do Ination Expectations currently pose a risk to the economy,

Quarterly Bullettin 2013 Q2 Vol 52 No 2(Bank of England, 2013).

The power of three | 3


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What to watch for

Efforts to boost business lending intensify,

but clear challenges remain

At a headline level, in terms of how accessible funding is for

entrepreneurial ventures, the UK appears to perform well in the

EY G20 Entrepreneurship Barometer 2013. However, with the

economy yet to emerge convincingly from a protracted downturn,

long-standing concerns about the ow of credit to start-up

businesses remain.

On some measures, the UK does well in terms of providing capital

for early stage businesses. For example, The World Economic Forum

rates access to venture capital as 3.4, on a scale from 1=impossible,

to 7=very easy, which compares well to a G20 average of 3.0. But

on access to seed and start-up funding for earlier-stage businesses

more generally, the situation is less positive, with weaker results

reported in the Barometer in areas such as public aid and family

funding.

For later stages of business expansion, banks are typically a key

source of funding. Indeed, given the disproportionate reliance of

smaller businesses on bank lending, much of the policy attention

has been focused in this area. In 2012, the UK Government and theBank of England launched the Funding for Lending scheme (FLS).6

The scheme works by providing cheap funding to banks that commit

to increase their lending.

According to the latest UK lending data, despite the introduction

of the FLS, net bank lending to small businesses fell in 2012 and in

the rst three months of 2013.7This doesnt take account of FLS

revisions in 2013, which sharply increased the incentives for lending

to entrepreneurial businesses, but it highlights that the ow of bank

credit is weaker to large enterprises than to smaller ones. In the EYG20 Entrepreneurship Barometer 2013, 75% of entrepreneurs in

the UK say that access to bank loans had deteriorated over the past

three years, compared with just 11% who say it has improved.

The Bank of England has suggested that one factor in the dip in

small business lending in 2012 might have been an increase albeit

from a relatively low base of the availability of alternative sources

of nance, such as peer-to-peer lending, crowdfunding, angel

investors, venture capital and private equity houses.8

These and other potential alternatives ought to be a focus of

ongoing policy attention, particularly given how crucial the

availability of equity capital is to high-growth businesses. As well as

being a source of funding, a frequent benet of equity funding isthat it is often provided by investors who have specic expertise that

they can contribute to the business.

72%of entrepreneurs in

the UK think that

access to funding is

difcult

2.4bNet drop in bank lending

in Q4, 2012, following

introduction of new Funding

for Lending scheme9

Recent trends in net lending to UK small- and medium-sizedenterprises (in GBP billion)

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

Source: Bank of England, 2013

Proportion of entrepreneurs citing improvement across access

to funding instruments

IPO

Bank loans

Bank loans

Private equity

Suppliers

Customers

Venture capital

Angels

Family

Public aid

Microfinance

Angels

Crowdfunding

3.6%

10.9%

10.9%

23.6%

7.3%

21.8%

9.0%

32.7%

23.6%

25.4%

29.0%

32.7%

41.8%

Expansion

Growth

Start-up

Seed


6 R Churm and A Radia, The Funding for Lending Scheme, Quarterly Review2012 Q4Vol 52 No 2(Bank of England, 2012).

7 Ibid. ft 68 Ibid. ft 79 Lending drops in Q4 despite Funding for Lending scheme Financial Planner website,

nancialplanneronline.co.uk, accessed 27 July 2013.



5/12

How the government is helping

The Patent Box

This is a tax incentive designed

to encourage increased

commercialization of innovation in

the UK. It provides a preferential

10% rate of corporation tax for

any business prots that can

be attributed to patents. Thisincentivizes the commercial

exploitation of patents in the UK,

while the Governments R&D Tax

Credit provides incentives for

businesses to carry out R&D in the

country.

Launch date: 2013

Most relevant pillars:

entrepreneurship culture, tax and

regulation

Funding for Lending

The Government launched the

Funding for Lending scheme with

the aim of boosting bank lending

to small businesses. Under the

scheme, banks can access cheap

funding if they commit to increase

their lending. The scheme runsuntil the end of 2015, and was

revised in 2013 to increase the

incentives for lending.

Launch date: 2012

Most relevant pillar: access to

funding

Regional Growth Fund

The Regional Growth Fund (RGF)

provides public funding to support

growth-focused projects and

programs that are also tapping

private sources of investment.

The RGF operates in England until

2016, with a total fund value of2.6b ($4.0b) and a minimum bid

threshold of 1m ($1.5m).

Launch date: 2011

Most relevant pillar: access to

funding

Key insight:more than the sum of its parts

Scott Button, Co-Founder and CEO, Unruly Media, UK

Unruly Media works with leading brands to deliver their social

video advertising campaigns. Since it was founded, it has

operated in Londons agship technology cluster the so-

called Tech City. Co-Founder and group CEO Scott Button

stresses the importance of entrepreneurial ecosystems.

Unruly Media has been operating out of Silicon Roundabout(now rebranded as Tech City) since it was founded in 2006.Over that time, CEO Scott Button believes that this niche start-

up ecosystem has gone from strength to strength.

The term Silicon Roundabout was a bit of a joke initially, but ithas done very well in terms of fostering a sense of communityamong entrepreneurs here, with sharing and exchange ofpeople and ideas, he explains. The district has expandedrapidly in recent years. In early 2013, there were an estimated300 start-up companies there,10and as recently as 2010 therewere only 85.11

Button believes that Unruly Media has benetted considerablyfrom being located alongside so many similar businesses.There is no doubt we have learnt from other high-tech

entrepreneurs here. Having the company of other people facingthe same challenges staves off loneliness. It has also stoppedus making mistakes as we have grown. As you scale you faceall sorts of organizational and management issues that youvenever had to deal with before. You can bring in new seniormanagers to deal with that, but being here has let us tap intosome of the same experience, a bit like the benet you get fromhaving experienced investors work with your business.

In December 2012, the British Government committed50m to regenerate Silicon Roundabout into Europes largestindoor civic space equipped, among other things, withstate-of-the-art 3D-printing technology.12Button believesthat the government should play a continuing role in thetech ecosystems development. They can raise the prole ofTech City and help develop a sense of identity for high-techentrepreneurs. It just doesnt have the same kind of status inthe UK yet that it does in the US. We need top talent drawn toentrepreneurship, hungry for success.

10 Tech City: the magic roundabout, The Guardian website, theguardian.com, accessed 2 July

2013.

11 Londons Silicon Roundabout,Wired website, wired.co.uk, accessed 29 June 2013.

12 Londons moment: The tech cluster in the east of Britains capital is on a roll, Wired website,

wired.co.uk, accessed 29 June 2013.



6/12

Access to funding

Pillar ranking: 2

UK entrepreneurs say bank credit is crucial,

but hard to obtain

The UK performs well in the EY G20 Entrepreneurship Barometer

2013 for access to funding. The country leads the G20 on the

extent of domestic credit in the private sector, with a rate as a

proportion of GDP that is more than double the G20 average.However, there are clearly challenges on the ground, with 70% of

entrepreneurs describing access to funding as difcult. Younger

entrepreneurs nd it even more difcult with just 11% considering it

easy to access funding.

At the heart of the challenge is the fact that bank lending to

entrepreneurial ventures is far more limited than it is to larger,

well-established companies. Local entrepreneurs identied bank

loans as the most important funding instrument for boosting

entrepreneurship over the long term. However, only 11% said that

access to bank loans had improved over the past three years, while

a striking 75% said it had greatly deteriorated. Access to funding

in the UK is tough. Weve got to create an ecosystem here with a

broader range of nancing options available for entrepreneurs,

argues Young Brits Networks Alex Mitchell. He advocates looking

at regional banks, using a model similar to the Sparkassen model in

Germany, as one example of how conditions might be improved.

In the absence of other formal channels of funding, new types

of funding are being made available. For example, 42% of

entrepreneurs cited improvements in crowdfunding, on the back of

a range of new platforms that have emerged in recent years, such

as Seedrs, Crowdcube and BankToTheFuture, among others.13All

this highlights the strong potential for innovation in nance in the

UK, but more progress is urgently needed. More could be done to

bolster other sources of early stage funding, such as angel investors

and venture capital rms. For example, improved tax incentives for

risk-taking equity investments, for both entrepreneurs and their

backers, especially angel investors, ought to be a priority.There are also other means of support available at a government

level, such as reforming procurement processes to make them more

workable for smaller businesses. Recommendations to this effect

have been made elsewhere, such as in Lord Youngs 2012 Make

Business Your Business report, but not enough change is yet being

seen on the ground.14

For more mature businesses, conditions are typically better, but

could still improve. For example, the volume of investment raised

through initial public offerings (IPOs) is above the G20 average, but

concerns remain. Only 4% of local entrepreneurs feel that access

to IPO nancing has improved over the past three years, while 51%

say it has deteriorated. Nevertheless, there have been positivedevelopments in other forms of funding. For example, in 2011, the

Business Growth Fund was set up with 2.5b to make long-term

equity investments.15It seeks to match any capital with experience,

advice and insight, and is focused on helping expand the rapidly

growing gazelles that are most valuable for job creation in the UK.

Access to funding United Kingdom G20 average Period

IPO market activity

IPO amount invested(% of GDP)

0.33 0.22 2009-11 average

Access to credit

Domestic credit to private sector(% of GDP)

209.5 99.0 2008-10 average

Venture capital availability (Scale of1=impossible to 7=very easy)

3.4 3.0 2009-11 average

M&A deal value (% of GDP) 5.8 3.4 2010-12 average

Sources: The World Bank, Dealogic, IMF, World Economic Forum

71%of entrepreneurs in the

UK surveyed believe that

improved access to bank

credit would improve

long-term growth in

entrepreneurship

Only 4% of local entrepreneurs

feel that access to IPO

nancing has improved over

the past three years, while

51% say it has deteriorated

Entrepeneurs view on how easy or difcult it is to access funding

Very easy

Somewhat easy

Somewhat difficult

Very difficult

Dont know or no opinion

0% 20% 40% 60% 80% 100%

Young entrepreneurs(up to 40 years old)

All entrepreneurs


13 Crowdfunding Takes Hold in the U.K. The Wall Street Journal website, online.wsj.com,accessed 21 June 2013.

14 Lord Young, Make Business Your Business: Supporting the startup and development of

small business(Crown, 2012).15 About us, Business Growth Fund website, businessgrowthfund.co.uk, accessed 14 June

2013.



7/12

Entrepreneurship culture

Pillar ranking: 6

Strong cultural support for entrepreneurship

and innovation

The UK ranks highly among its G20 peers as a supportive place

in which to be an entrepreneur. Seventy-one percent of local

entrepreneurs agree that the UK has a culture that supports

entrepreneurship, compared to a G20 average of 57%.

A wide range of factors underpin this cultural support for UK

entrepreneurs. For example, there is broad cultural appreciation

of famous entrepreneurs such as Richard Branson, as well as from

prime-time TV shows such as the BBCs Dragons Den. The privatesector also has a role to play in promoting entrepreneurialism,

with high prole programs such as The EY Entrepreneur of the

Year, a high-prole celebration of entrepreneurial achievement

for those who are serious about business and making an

important contribution.

Across the G20, only respondents from Japan noted more

favorable attitudes toward entrepreneurship as a career

choice. However, Alex Mitchell, the co-founder of Young Brits

Network, which seeks to provide a global voice for young UK

entrepreneurs, adds that this is also being driven by the high

rates of unemployment in the UK, especially among young

people and minority groups. The nancial crisis, the lack ofjobs and opportunities, these are all forcing people to reconsider

entrepreneurship as an opportunity to get into the world of work,

and to create value for themselves, he says.

To support these efforts, though, more could be to be done to

help develop the entrepreneurship culture, for example by not

stigmatizing business failure. While initiatives such as StartUp

Britain will boost rates of new business creation, it is inevitable

that not all of these will succeed. More needs to be done

perhaps through the media to convey the fact that business

failure is often a crucial step on the way to subsequent success for

an entrepreneur. A high-prole example is Dragons Den star Peter

Jones, who had to move back in with his parents at the age of 30,before going on to become a multimillionaire entrepreneur.16

Just 13% of local entrepreneurs said that business failure is

perceived as a learning opportunity in the UK, compared to

a G20 average of 23%. Accordingly, local entrepreneurs felt

strongly that more could be done to bolster their reputation as job

creators: 62% felt this would have a positive impact on the UKs

entrepreneurship culture.

The UK has a strong reputation for innovation, which the

Government continues to encourage with new incentives,such as a preferential 10% tax rate (the Patent Box), which

was introduced in 2013 and which applies to prots that are

attributable to patents. Overall UK spending on R&D is above the

G20 average, while the number of scientic and technical journal

articles published is the third highest after Australia and Canada.

Entrepreneurship culture United Kingdom G20 average Period

R&D spending (% of GDP) 1.8 1.6 2007-09average

Scientic and technical journal

articles (per 10,000 people)

7.6 3.3 2007-09

average

Cost of resolving insolvency(% of estate)

6.0 11.8 2010-12average

Source: The World Bank

71%of local entrepreneurs

agree that the UKs culture

supports entrepreneurship

compared to a G20 average

of 57%

Only 13% of entrepreneurs in

the UK see business failure

as a learning opportunitycompared to the G20 average

of 23%

Entrepreneurs views as to which factors will have the highest impactupon entrepreneurship culture

Promotion of the role of entrepreneursin creating new jobs

Improve communication aroundentrepreneurs' success stories

Promote the career opportunitiesoffered by entrepreneurship

Government programs providingeducation, funding and profile raising

G20 focus on and support ofentrepreneurship

Promotion of the high risk/high returndynamics of entrepreneurship

Improve tolerance of business failure

High-impact

Medium-impact

0% 20% 40% 60% 80% 100%

Low-impact

Dont know or no opinion


16 Fame & Fortune: Dragons Den star Peter Jones, The Telegraph website,

telegraph.co.uk, accessed 24 June 2013.



8/12

Tax and regulation

Pillar ranking: 4

A strong focus on business-friendly rules and

regulations, but continued progress is needed

The UKs position as fourth in the tax and regulation pillar is driven

by its strength in delivering business-friendly regulations. The costs

and time involved to start a business are both low, for example.

However, our survey responses suggest that entrepreneurs are

wary about wider regulatory trends and increases in red tape, with

just 13% saying things had improved over the last three years,

compared to 44% who said they had deteriorated.

From a tax perspective, however, the UK Government has

made solid progress. It has embarked on a series of cuts to the

corporation tax rate, which will come into full effect over the next

two years, but which are already sending a strongly pro-business

signal to entrepreneurs. In April 2013, the main corporation tax

rate fell from 24% to 23%. It will be cut again to 21% in 2014 and

to 20% in 2015. This will leave the UK with one of the lowest

corporate tax rates across the G20. This should make a strong

impact as local entrepreneurs prioritized cuts in the corporate tax

rate ahead of simplication of existing tax rules (a direct reversal

of sentiment in the US) as the initiative that would do most to

improve the overall tax environment in the UK.

Beyond this, the most popular tax or regulatory change the

Government could introduce to boost entrepreneurship overall

would be to improve tax incentives for innovation. Ninety-ve

percent of entrepreneurs surveyed indicated that this would have

a medium or high impact to the entrepreneurial ecosystem. The

Government has made progress in this area recently though, such

as through its Patent Box tax incentives for businesses that can

attribute prots to the exploitation of patents.

Tax and regulation United Kingdom G20 average Period

Ease of starting a business

Start-up procedures (number) 6.0 7.6 2010-12 average

Time to start a business (days) 13 22 2010-12 average

Cost to start a business (% of income per capita) 0.7 9.4 2010-12 average

Paid-in minimum capital to start a business (% of income per capita) 0.0 17.9 2010-12 average

Business regulations

Time spent on tax issues (hours) 110 347 2010-12 average

Labor market rigidity

Cost of ring (weeks of wages) 22 50 2007-09 average

Labor and tax contributions (% of commercial prots) 10.2 24.0 2012

Taxation

Total tax rate (taxes and mandatory contributions borne by the

business expressed as a share of commercial prot)

35.5 49.7 2012

Indirect tax rate (taxes collected by the company and remitted tothe tax authorities)

20.0 14.2 2012


The UK corporation tax

rate is set to continue to

decrease moving from

23% in 2013 to 21% in

2014 before decreasing

to 20% in 2015; this

leaves the UK with one of

the lowest corporate taxrates across the G20

Development of a government agencyto assist new businesses in complyingwith tax filing requirements, 5%

Reduction of indirect taxrates,11%

Simplification of tax rulesand regulations regardingcalculation of tax liability,20%

Reduction of corporateincome tax burden,29%

Reduction of personalincome tax burden, 35%


Preferred single initiative to improve taxation



9/12

Education and training

Pillar ranking: 6

A strong educational backdrop, but clear room

for improvement

The UK performs relatively well in terms of the education and

training aspects of its overall entrepreneurial environment. One of

the factors underpinning this performance is a high level of public

spending on education. At about 5.5% of GDP, the UK spends well

above the G20 average of 4.8% and enrollment levels are also

above average overall.

However, there is mixed evidence about the degree to which

this spending is feeding through to support the specic needs

of entrepreneurs. One measure of output is provided by the

Programme for International Student Assessment (PISA), which

measures the performance of 15-year-olds in mathematics,

reading and science. Between 2006 and 2009, the UKs 15-year-

olds dropped from 17th to 25th in reading, 24th to 28th in

mathematics and 14th to 16th in science.17

When it comes to tertiary education, the pool of skilled talent

available has risen sharply as the proportion of the UK labor force

with a degree or other tertiary-level qualication has increased up from 26% in 2000 to 37% in 2011.18But there is still room

for improvement: at 57.8%, the tertiary enrollment ratio is well

below the levels of other mature G20 economies, such as the US

(89.8%) or Australia (76.0%).19This matters, not least because the

education sector is an important source of innovation. Education

sector R&D accounts for 27.2% of total R&D in the UK, well above

the average of 22.3% across the other G20 countries.

In terms of sentiment on the ground, local entrepreneurs report

improvements in several aspects of education and training. About

one in two (49%) note improvements in informal networks, while

34% cite gains in specic programs at universities and business

schools. There has got to be far more real advice, awareness

and understanding of what it is to create a viable business. In the

UK there are already some great examples of entrepreneurship

ecosystems with structure support across the whole journey; the

Business Wales One Stop Shop Service covers everything from

mentoring and tendering to international trade and employment

and is a good example of what a joined up approach can look like

adds Young Brits Networks Alex Mitchell.

But more could be done to bolster education and training. In

particular, corporate engagement with both schools and start-ups

could be much stronger, which could further bolster some of the

gains being seen in areas such as vocational education.

Education and training United Kingdom G20 average Period

Public spending on education (% of GDP) 5.5 4.8 2008-10average

Secondary school enrollment (total enrollment

expressed as a percentage of the populationof ofcial secondary education age)

100.6 95.0 2008-10

average

Tertiary enrollment (total enrollmentexpressed as a percentage of the totalpopulation of the ve-year age groupfollowing on from secondary school leaving)

57.8 53.5 2008-10average


8/10UK entrepreneurs think

students need access

to specic training to

prepare for setting up

their own ventures

Tertiary enrollment in the UK

at 57.8% does not compare aswell with other mature G20

economies, such as the US at

89.8% or Australia at 76.0%

(200810 average)

Proportion of entrepreneurs citing improvement in education and training

programs over the last three years

Informal networks

Mentoring

Specific programs at university/business schools

Entrepreneurship conferences and seminars

Coaching programs for entrepreneurs

Dedicated entrepreneurship chairs inuniversities and business schools

Vocational education in school curriculum

Corporate engagement with local schools

Corporate engagement with start-ups

Government programs supportingentrepreneurship

Training period at schools

49%

40%

35%

33%

29%

31%

29%

27%

27%

25%

13%


17 UK Schools slip down world rankings,The Guardian website, theguardian.com, accessed2 July 2013.

18 Labour force with tertiary education (% of a total), The World Bank website, data.

worldbank.org, accessed 30 June 2013.

19 School enrolment, teriary (% gross), The World Bank website, data.worldbank.org,

accessed 30 June 2013.



10/12

Support levels appear to be slipping

From mentors and entrepreneur networks through to

incubators, coordinated support is a vital aspect of the overall

entrepreneurial ecosystem. And it is one that the UK could

pay more attention to. This is most clearly the case in relation

to business incubators. While one in two entrepreneurs

surveyed across the G20 report noted that access to business

incubators has improved over the past three years, only halfas many feel the same in the UK. This is worrying, given that

UK entrepreneurs pointed to business incubators as the top

initiative to boost the long-term growth of entrepreneurship in

the country.

According to Alex Mitchell, the co-founder of Young Brits

Network, which seeks to provide a global voice for young

UK entrepreneurs, one problem is the complicated range

of support vehicles that are available. There are a lot of

high-prole awareness building initiatives, but from direct

feedback Ive had from entrepreneurs theres a feeling that

theres almost too many, that they change too often and that

its difcult for entrepreneurs to know where to start. Whenstarting out you are going to be on a steep learning curve and

you are always going to be time poor, so there is a real need to

cut through some of the confusion and ensure information and

initiatives are easy to engage with, easy to access and, where

possible, easy to implement.

This is not to suggest that progress is not being made at all.

In the UK, 41% of entrepreneurs surveyed believe that there

has been improvement in relevant clubs and associations over

the past three years, which also rate highly as crucial aspects

of support. Nevertheless, the category as a whole is one in

which more work could be done, to ensure that activities are

aligned, easy to access and complementary. We need toencourage and support entrepreneurs. Government can play

a key role in facilitating that, helping create the conversations

and platforms for entrepreneurs to meet, speak and work

together, says Mitchell.

Coordinated support

Pillar ranking: 17

45%of local entrepreneurs feel

that business incubators

would do the most to

improve the long-term

growth of entrepreneurship

in the UK

Top ve initiatives and organizations that could most improve the

long-term growth of entrepreneurship

Business incubators

Entrepreneurial workshops/support meetings

Government start-up/other programs

Entrepreneur clubs and associations

Teaming/mentoring

45%

44%

35%

33%

33%




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Rankings table

Ranking Access to

funding

Score Entrepreneurship

culture

Score Tax and

regulation

Score Education and

training

Score Coordinated

support

Score

1 United States 7.12 United States 7.67 Saudi Arabia 6.40 France 6.58 Russia 6.23

2 United Kingdom 6.86 South Korea 7.53 Canada 6.34 Australia 6.53 Mexico 5.89

3 China 6.75 Canada 7.45 South Korea 6.34 United States 6.50 Brazil 5.87

4 Canada 6.62 Japan 7.28 United Kingdom 6.19 South Korea 6.40 Indonesia 5.84

5 Australia 6.48 Australia 7.18 South Africa 6.10 EU 6.25 India 5.76

6 South Africa 5.95 United Kingdom 7.00 Japan 6.07 United Kingdom 5.98 China 5.75

7 Japan 5.81 Germany 6.88 Germany 5.84 Germany 5.89 Turkey 5.66

8 South Korea 5.75 EU 6.07 Australia 5.75 Argentina 5.85 South Africa 5.65

9 Brazil 5.67 France 5.68 Russia 5.65 Canada 5.81 Argentina 5.64

10 Indonesia 5.53 Russia 5.05 EU 5.48 Brazil 5.78 Germany 5.53

11 India 5.48 India 4.95 Turkey 5.45 South Africa 5.67 France 5.41

12 EU 5.41 Brazil 4.88 Indonesia 5.38 Saudi Arabia 5.66 Saudi Arabia 5.39

13 Saudi Arabia 5.25 Italy 4.67 United States 5.33 Italy 5.47 EU 5.37

14 Germany 5.23 South Africa 4.33 Mexico 5.21 Russia 5.46 South Korea 5.36

15 Russia 5.04 Turkey 4.30 France 5.12 Mexico 5.32 Australia 5.31

16 France 4.74 Argentina 4.06 China 5.07 Japan 4.72 Canada 5.29

17 Turkey 4.57 Mexico 3.96 Brazil 4.83 Turkey 4.39 United Kingdom 5.19

18 Mexico 4.42 China 3.88 Italy 4.76 China 4.35 Japan 5.04

19 Italy 4.03 Indonesia 3.80 India 4.39 Indonesia 3.88 Italy 4.97

20 Argentina 3.27 Saudi Arabia 3.38 Argentina 4.31 India 3.49 United States 4.85

About the EY Entrepreneurship Barometer model

The EY G20 Entrepreneurship Barometer

2013 introduces a model for scoring countries

across the ve pillars of entrepreneurship.20

The purpose of this model is to help identify

areas of relative strength by country and where

opportunities for improvement lie.

The model is composed of qualitative

information (from our survey of more than

1,500 entrepreneurs) and quantitative data

based upon entrepreneurial conditions across

the G20 economies. For each pillar, excluding

coordinated support, this information is

weighted 50-50 between qualitative and

quantitative inputs. For coordinated support,

given a lack of quantitative indicators, this is

based solely upon the survey responses.

The advantage of integrating both the survey

results and quantitative data is the ability to

provide an assessment of the current level and

the trends in a G20 entrepreneurial ecosystem

based upon local sentiment. To this end, ofcial

statistics (for example, on the average time

taken to start a business or the tax burden)

provide a baseline for each member country.

Survey information is an important

complement to the baseline picture these

statistics provide. Entrepreneurs feedback on

the pace of improvement or deterioration in

conditions in their countrys entrepreneurship

ecosystem is incorporated in the model

alongside the hard statistics.

Full details of the Barometers methodology

can be found on page 66 in the main EY G20

Entrepreneurship Barometer 2013 report.

20 Note: As per the G20 membership, this list comprises 19 individual countries and also the European Union (EU), as an additional

member. Our rankings show the performance of each country, along with an aggregate performance for the 27 EU Member States.



12/12

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weve helped many of the worlds most dynamic and ambitious companies

grow into market leaders. Whether working with international mid-cap

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draw upon their extensive experience, insight and global resources to help

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to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors

for specific advice.

The opinions of third parties set out in this publication are not necessarily the opinions of the global

EY organization or its member firms. Moreover, they should be viewed in the context of the time they

were expressed.

ey.com

Contacts

Iain Wilkie

Strategic Growth Markets Leader,UK&I, EY

+44 207 951 3410

[email protected]

Bjrn Conway

Government & Public SectorLeader, UK&I, EY

+44 207 951 1749

[email protected]

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Documents

G20 Entrepreneurship Barometer 2013 UK-1