The Entrepreneurial Mind

Babson College has released a new Global Entrepreneurship Monitor Report. Entrepreneurial behavior continues to fuel the engine of innovation and growth around the world; and countries with the lowest levels of Gross Domestic Product (GDP) boast higher levels of start-up entrepreneurial activity according to the eighth annual Global Entrepreneurship Monitor (GEM).

Buoyed by a strengthening economy, U.S. entrepreneurs have created most of the 6.8 million new jobs in the nation since 2003. These entrepreneurs are young (under 35), educated (52% with one or more degrees), and continue to choose the entrepreneurial, opportunity-driven lifestyle over more stable -- and frequently -- more lucrative careers.

More U.S. Findings:

- 30% of new business start-ups offer more in terms of innovative products and services compared to established business owners. U.S. entrepreneurs are early-adopters too of current technologies; 32% of start-up companies use the latest compared to just 16% of established businesses.

- Start-up entrepreneurs are the most optimistic--20.1% expect to create more than ten jobs and 50% growth in five years compared to just 7.5% of established business owners.

- VC in the U.S. has leveled out to $22-$24 billion in the last three years--way off its 2000 peak of more than $100 billion--but is a five-fold increase over the level in the early 1990s. New Trends: VC has shifted from software to biotech and the wireless sector of telecom. IPOs remain in the doldrums.

Key Global Findings:

- An entrepreneurial boom exists in China and India. New business start-ups in China are up 16.2% from 13.7% last year; 60 % are opportunity-driven; 70% of the Chinese think entrepreneurship is a good career choice; and 32% expect to start a business in the next three years. Chinese governments and policies are most supportive--new funds, new incubators, science parks are all recent initiatives. Improvements in education, funding, and commercial infrastructure are still in demand.

- The scenario is similar in India where one in every ten is engaged in entrepreneurial activity, and the gender gap narrows in India. But India has the highest level of business exits (15%) among GEM nations in 2006. The communications infrastructure is excellent, yet governmental bureaucracy and the presence of 'big player' companies make it difficult for start-ups to establish themselves. Surprisingly, India is behind in developing new policies in support of entrepreneurs.

- Entrepreneurial activity rises in countries with low GDPs. Countries with similar levels of GDP tend to have similar entrepreneurial activity-- most likely because of the dominance of large businesses.

- Entrepreneurs everywhere are taking advantage of opportunities; still countries with the lowest GDP have the highest levels of necessity-driven entrepreneurs. France and Germany –where necessity entrepreneurship is high--are the exceptions, most likely because of labor reforms which encourage business start-ups over unemployment services.

- The number of new business start-ups is always higher than established business ownership. This is particularly the case in the U.S. where Early-stage entrepreneurship is high compared to Europe where established business ownership is similar.

- Low and middle income countries show higher levels of innovation and technology in Early-stage entrepreneurship than in established businesses. Still, these less-developed countries are not necessarily using technologies that would be considered new in more sophisticated consumer markets of higher income countries.

- Experience and Gender still matter--Early-stagers are young (24-25) and men are more likely to be entrepreneurially active. The exception is women from higher income countries who are less likely to be entrepreneurs than their lower income counterparts.

Here is a link to the full report.