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Hearing it for women entrepreneurs
woMen run 46% of tHe worlD’s private Businesses, But tHeir enterprises Don’t always scale up to Make tHe Big tiMe. tHey neeD Mentors, capital anD networks, Maria pinelli, ernst &young’s gloBal vice-cHair for strategic growtH Markets tells sinDHu nair .
overall investMent in sMes across tHe g20
of tHe total ($11,507 Billion) for all forMs of investMent
cHina sMe investMent
us sMe investMent
ugely!” – that’s how important the World Entrepreneur of the Year Awards (WEOY) are for Maria Pinelli, Ernst & Young’s Global Vice-Chair for Strategic Growth Markets. “WEOY is one of our most important events. In terms of scale, it is one of the most global events we host, celebrating 59 entrepreneurs from 51 countries. They represent
over $59 billion in revenue and 300,000 jobs, and they grew by 17% last year,” says Pinelli, the figures all at her fingertips. “We all love entrepreneurs for the gifts they give us. What would our world be like without their fantastic products and services? Each time their inspiration becomes a reality they raise standards of living by creating good jobs. We need more entrepreneurs, as we are all about promoting more jobs, a stronger economy and a better standard of living.” And at each year’s WEOY, the lessons these passionate entrepreneurs pass on are about optimism and confidence. “Our entrepreneurs are amazing,” says Pinelli. “Even as the economy struggles, entrepreneurs are hiring, because they are expanding. They thrive on chaos and uncertainty; they are not afraid of failure, and they
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“we Have DiscovereD tHat 40% of tHe worlD’s private Businesses are run By woMen, But tHey Just Don’t scale in figures to Be in our prograMMe.”
take risks. We have so much to learn from them.” Women fail to scale up While the effect entrepreneurs have on the global economy is indisputable, the number of women entrepreneurs in this year’s line-up of country winners seems to have diminished. 2012 had just one woman winner. Does that reflect a lack of support for women globally with startups? “We need more women entrepreneurs, period. We have discovered that 40% of the world’s private businesses are run by women, but they just don’t scale in figures to be in our programme.” There is hope, however, for women whose entrepreneurial activities are strong but not strong enough in profit terms for WEOY. Ernst & Young also has an annual
competition and leadership development programme called Entrepreneurial Winning Women that identifies women entrepreneurs whose businesses show real potential to scale up – and then helps them to do it. “The idea is to help grow more companies in the pipeline so that eventually they can be recognised on a global scale with the rest of the entrepreneurial community,” explains Pinelli. “And the Middle East is going to be included for this programme,” she assures us. Women need access to mentors, to capital and to networks to be more profitable in their enterprises, and these critical factors have to be looked into, she says. Women entrepreneurs are a powerful force in the American economy. Because of their success in launching new ventures, 46% of the privately-held firms in the US
are now at least half-owned by women. These companies represent almost 16 million jobs. However, despite robust growth in the early stages, these companies are not scaling up to the degree they could. Businesses owned by men are three and a half times as likely to reach $1 million in annual revenues as businesses owned by women. “If you look at an economy where women with any business would thrive as entrepreneurs, we find that if women started with the same amount of capital as men we would have 6 million more jobs in three years,” Pinelli says. Two million more jobs a year – almost a country in itself, she notes. “With Entrepreneurial Winning Women, we see an important opportunity to bridge the missing middle – those second-stage entrepreneurs at a crucial stage of growth
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“tHe five Barriers are access to funDing, eDucation, tHe entrepreneurial culture, regulation anD taxation, anD coorDinateD support. But of tHe two tHirDs of tHe 1,000 entrepreneurs we intervieweD, tHe one MaJor Barrier all of tHeM MentioneD was access to funDing.”
who often can’t readily find the tools needed to continue to scale – and help them make their way towards market leadership.” A story of grit The last WEOY had three women country winners, so the figures do vary, though there has been a global woman winner only once in the 26 years of the programme. Pinelli reminisces about the WEOY 2011 winner, Olivia Lum from Singapore, the CEO and President of Hyflux Limited. “I am completely biased, but I was so proud of the judges for choosing her. She didn’t have the biggest company, nor the fastest trajectory of growth. But she did have a terrific company and an incredible story. She was our first woman winner. Lum was abandoned as a child and was raised by a woman who took in several children. When she was nine years old, she was the only breadwinner for the family. She learned which food banks supplied food and persisted till she got her and her family’s share. She raised money by doing odd jobs. She put herself through college by doing part-time jobs.” Lum made enough from working for a pharmaceutical company to own a car and a flat, both of which she sold to venture out on her own and start a water treatment and recycling business, which she realised would work well in water-scarce Singapore. “We don’t sit on the judging panel, as we want to be completely unbiased, but one of the judges told me they asked Lum how she handled adversity and her answer was, ‘When you are hungry what else is there?’ – an answer I was greatly touched by, and so were the judges.” A voice that counts How does having such a global event help entrepreneurial activities? “Having 1,000 entrepreneurs every year “The five barriers are access to funding, education, the entrepreneurial culture, regulation and taxation, and coordinated support. But of the two thirds of the 1,000 entrepreneurs we interviewed, the one major barrier all of them mentioned was access to funding,” Pinelli recalls. It turns out that while 50 % of employment is driven by SMEs they receive only 6% of funding. At a time when many developed economies are facing a weak economic outlook, the importance of nurturing entrepreneurial ventures is greater than ever. Highgrowth entrepreneurial companies will play an important role in rebalancing the economy. Their rapid rate of expansion means they have great potential to create jobs at a time when many G20 countries are facing stubbornly high rates of unemployment. And it is not just in developed markets, says Pinelli. “Entrepreneurship is also vital to the future of rapid-growth markets. Although many of these economies have enjoyed high rates of GDP growth for the past decade, their strong performance has often depended on low-cost exports, a commodity price boom and large-scale investment in infrastructure. “In the coming years these markets must rebalance their economies towards greater domestic consumption, import demand and higher-value business activity. The creation of an environment in which entrepreneurship can flourish will be an important step in achieving these objectives.” Which is why Ernst & Young has brought out a report titled Funding the Future: Access to Finance for Entrepreneurs that analyses the opportunities and issues around access to finance for entrepreneurs in the G20 markets and provides recommendations for action that could be taken by entrepreneurs and governments at each of the four stages of entrepreneurial development
global vice-chair for strategic growth markets, ernst & young
worldwide give their perspective is quite unusual, but WEOY allows us to ask them for their views, such as their experiences, what changes need to be made, what barriers exist and what government support needs to be given, what changes need to be made in education to help them. We have taken our entrepreneurs to the White House, to G20 meetings, and to the Young Entrepreneurs’ Alliance, and helped them voice their opinions. There is so much more we could do. We are just scratching the surface, but having the entrepreneurs’ voice is vital, as we use it to maximise their participation,” says Pinelli passionately. And right from the horse’s mouth we hear about the main barriers that entrepreneurs face in a developing market.
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