High-Impact Entrepreneurship

Endeavor Insight: Who wins and who loses when it comes to financing?

Endeavor Insight releases an interactive financial dashboard here.

What makes a healthy financing landscape for entrepreneurs? What countries are best suited to support an entrepreneur’s financial needs? These questions have no simple answer, no single metric to point to as the “golden indicator” of sound financial support for entrepreneurs. While Gross Domestic Product (GDP) may be a good gauge of the well being of citizens within a country, per capita GDP or financing as a ratio of GDP, two metrics often cited as litmus tests for the financing landscape of a country, may not accurately or holistically illustrate the true support available to entrepreneurs. One shortcoming is that it does not account for the need for differentiated financing throughout an entrepreneurial venture’s life cycle. Indeed, the best “entrepreneur environment” can differ depending on the particular needs and type of financing required by an entrepreneur at a particular moment in time.

To begin to shed light on this dimension as well as the numerous other layers of financing complexity in emerging markets, the Endeavor Insight team collected ~50  financing metrics across 13 countries. If GDP is normalized across this data for countries of different size and stage of development, and used as the measure of the health of a financing ecosystem, it might be easy to proclaim that just like with individuals, the higher the GDP, the higher the “standard of living” for firms. However, this simplistic view is not bared out in more thorough analysis.

Instead, what seems to really matter is how much of the total financing pool is accessible to each individual firm. Averaging financing per firm is greatest in countries with capital intensive industries, such as Israel, Saudi Arabia, Chile, Turkey and South Africa. Not surprisingly, many of these markets are cited as a “hot” markets for entrepreneurs. Interestingly, Brazil , often touted as just one of these exciting markets, appears to be under-financed on a per firm basis. This underperformance suggests remaining opportunity to improve and accelerate investment within Brazil.

To learn more about access to financing in emerging markets, visit Endeavor’s Financing Dashboard.

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