Digital Single Market
Digital Economy & Society

- What are the biggest challenges faced by entrepreneurs and in particular by webentrepreneurs during the current economic crisis?

Discussion

 

Entrepreneurs have to face numerous challenges on the road to success, in particular with regard to access to finance. We have seen in our previous discussions in the past editions of Digital Agenda Assembly the different bottlenecks that entrepreneurs have to overcome. In this particular context of the current economic crisis, entrepreneurship seems to offer a fundamental solution to create jobs and growth, but at the same time the crisis has induced a tightening on credit that affects negatively innovative SMEs. 

In this times of crisis, what are the biggest challenges faced by entrepreneurs and in particular by webentrepreneurs? To what extent the problem of access to finance has been exacerbated by the crisis?

 

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Comments

Valentina Parziale's picture
The European Union is facing the most severe economic crisis in 50 years, with the unemployed breaking the 25 million threshold. As predicted by the Ernst & Young Eurozone Forecast, it is likely that 2013 will be a second consecutive year of mild contraction, with GDP forecast to fall by 0.5% and a further rise in unemployment. In this context, new, fast-growing tech enterprises and web entrepreneurs can play a key role in creating new and sustainable jobs and, ultimately, in shaping the future path of economic growth. However, difficulties in accessing finance, increasing tax burdens and lack of tailor-made policy support could weigh down especially for young entrepreneurs, micro and small enterprises. Which are the main challenges? How can they be helped to succeed in the current crisis?
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Silvia Selandari's picture
During the current crisis, entrepreneur and webentrepreneurs face unprecedented challenges in accessing credit (credit crunch). This issue should be addressed with effective policies at the European and State level.
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Federico Morato's picture
I think that the main challenge is to keep pace with the technologies that are ever changing and/or updating in a very short time. The service you provide or the product you sell today, tomorrow could be too old. It is therefore necessary to make continuous investments in an economic situation where one of the main problems is the lack of liquidity: access to credit is very difficult to obtain, and quick payments by customers are becoming increasingly difficult, especially if customers are PA. Definitely, I believe that the tradeoff between investing constantly in order to compete in a global world without boundaries and the availability of resources to carry out such investments is the main challenge for young entrepreneurs in the ICT sector.
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Juan Pablo Laporte's picture
This could be addressed with an accelerated depreciation (of high tech assests) policy
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Jerome Roche's picture
What kind of resources would you propose to support tech entrepreneurs ?
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Alessandro Cenderello's picture
Thank you for your comments. You have raised two very good points. Actually, bank lending, which is by far the most important source of funding for entrepreneurs, declined in many countries as a result of the current downturn. Late payments by the public sector are also another key issue, which is at the core of the revised Late Payments Directive 2011/7/EU. Follow the new discussion here: http://bit.ly/15FLClG
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Gianluigi Cuccureddu's picture
Access to funding is -as cliché as it may sound- a great challenge. I've also heard that in certain countries, if an entrepreneur goes brankrupt, it takes a lot of time for him/her to start over again. Bureaucracy should be minimized.
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Paul Foley's picture
Eric Reiss and others have been advocates and observers of the 'Lean Start-up' movement. This is an approach, facilitated by online technologies, for launching businesses and products. The approach relies on validated learning, scientific experimentation, and iterative product releases to shorten product development cycles, measure progress, and gain valuable customer feedback. In this way businesses can design their products or services to meet the demands of their customer base without requiring large amounts of initial funding or expensive product launches. Reiss and others would argue that the importance of finance has decreased in many industries. The term Lean 'START-UP' is unfortunate, the method applies equally to established businesses developing new products and services
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Antonio Hyder's picture

Not only lean start ups help us lift the company with a little-cost orientation, but it also helps to adapt and change quickly as we adapt our product to a sometimes unknown market.

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Antonio Hyder's picture

Not only lean start ups help us lift the company with a little-cost orientation, but it also helps to adapt and change quickly as we adapt our product to a sometimes unknown market.

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Juan Pablo Laporte's picture
People always say that access to finance/investment is the key issue for entrepreneurs. I would like to point out that accessing to FINANCERS is also difficult. Web entrepreneurs have to spend a lot of money (sometimes entry fees are high) in order to participate in workshops or fairs where they are put in touch with business angels and other types of investors. I think it is important for European government and the EU to have an active role in the organisation of workshops between entrepreneurs and investors, so as to increase the chances for entrepreneurs to get in touch with the right investor.
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Michele Cimmino's picture

Access to credit, late payments and bureaucracy are very important challenges that you are all correctly bringing up here. It is also true that web-entrepreneurs are well aware of these problems when they decide to embark on creating their own business.
Let me bring in a different perspective to the debate: what is the scope of becoming web-entrepreneurs in this moment of economic crisis? The question came to my mind in these days when Yahoo! seems to have started a new shopping season by acquiring Tumblr, and probably Hulu.
If you talk to a web-entrepreneur, s/he will always have a vision and an objective of what s/he wants to achieve. In this moment of economic crisis, the objective might become more and more to build something attractive enough to be bought by Yahoo!, Facebook or Google: Tumblr, Istagram, Waze, Glancee to mention few of the latest bought, or about to be bought. I am not saying that this is a bad thing but surely looks like a limitation to the creation of EU innovative companies.
Startups face the dilemma of developing their ideas and their own business plans (becoming the next Mark Zuckerberg or Jeff Bezos might still be many web-entrepreneurs’ dream) or creating something with the objective of entering in acquisition talks with any of the big companies which could instantly monetize the startup. If startups don’t look for their business models, they will undoubtedly end up becoming a prey of foreign companies limiting their potential contribution to create new jobs in the EU and help getting out from the economic downturn.

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