GEM Finds World's Entrepreneurs Fly Solo

Anyone working with an entrepreneur knows they like to write their own rules. The latest survey characterizing the world's pool of entrepreneurial talent finds a large majority of them also write their own checks to finance their businesses. It's easier to write - and change - the rules when you also control the purse strings.

Seventy-three million people are nascent entrepreneurs or own or manage a young business, according to the 2004 Global Entrepreneurship Monitor (GEM) released today. Directed by Babson College and the London Business School, the report is the largest annual measure of entrepreneurial activity worldwide.

The report strongly supports the notion that self-funding and informal investment are critical to an entrepreneurial society. About 99.9 percent of nascent entrepreneurs launch new ventures without formal venture capital or business angel investments, the report states. Entrepreneurs themselves provide 65.8 percent of the start-up capital while others, mainly informal investors, provide the remaining 34.2 percent.

Of the nation's 500 fastest-growing private companies, the report adds, 88 percent never received financing from business angels. In contrast, 33 percent of the same 500 companies raised start-up capital by tapping the assets of family and friends.

New to this year's report is analysis demonstrating a relationship between Total Entrepreneurship Activity (TEA) and per capita Gross Domestic Product (GDP). Entrepreneurial activity declines as countries attain higher national income, reaching its lowest point at about $30,000 (US) per capita GDP, the report observes. Beyond that level, TEA begins rising slowly and steadily as GDP continues to rise.

The 2004 U.S. GEM report is available at http://www.gemconsortium.org.