Falling early entrepreneur rate still among highest in Europe

THE RATE of early-stage entrepreneurial activity in the Republic continues to be one of the highest in Europe despite the downturn, according to a new Enterprise Ireland-sponsored report.

The Global Entrepreneurship Monitor Report 2010 shows a 6.8 per cent fall in the level of early stage entrepreneurial activity.

This is down 31 per cent since 2005, considered the peak year in Ireland for the activity.

Across the age groups, those aged between 55 and 64 were the only group in which an increase in early stage entrepreneurial activity was evident. The level among this age group, however, is considerably below that of the most active age group (35-44), of whom almost one in 10 was involved in early-stage activity in 2010.

The rate of established entrepreneurs among the adult population, at 8.6 per cent, is on a par with Australia and slightly ahead of the US.

The report shows so-called “necessity-driven” entrepreneurship has risen by 32 per cent, with three in 10 entrepreneurs motivated by necessity rather than by opportunity to set up a business. This compares to one in five in 2008 and almost one in 17 in 2007.

According to the study, about 800 people set up a new business each month in 2010, as against 2,800 in 2008.

Among those establishing businesses, a quarter do not expect to become employers. This is against 18 per cent who said the same in 2008 and 11 per cent in 2005.

The report shows that fewer people see entrepreneurial opportunities in Ireland than before. The perception of opportunities fell from 46 per cent in 2007 to 27 per cent in 2008 and dropped to just 23 per cent last year.

In addition, the number aspiring to be an entrepreneur has declined from 12.6 per cent in 2005 to 10 per cent in 2008 and to 8.4 per cent in 2010.

The report indicates that 64 per cent of entrepreneurs expect to have customers in export markets, well above the EU average of 45.5 per cent.

The proportion of the Irish population who are informal investors increased from 2.8 per cent in 2008 to 3.8 per cent last year. The rate, however, is still lower than it is in the US and across the OECD.

However, the average amount committed by informal investors in Ireland in the last three years in a business owned by someone else (€46,000) is higher than both the EU and OECD averages.