Young people show strong interest in entrepreneurship, yet few start businesses. A new OECD-EC report offers five policy pointers to change this trend.
Why do many young people seemingly exhibit great interest in becoming entrepreneurs, but so few go on to start their own businesses? Together with the OECD, the European Commission (EC) established a policy-learning network, the Youth Entrepreneurship Policy Academy (YEPA), to answer this question. In a new report, the network reflects on key insights from the past two years of activities and presents five policy pointers that propose actionable next steps to engage more young people in the world of business and start-ups.
The initiative, which included Swiss voices, builds on insights from the OECD’s earlier report ‘The Missing Entrepreneurs’, which found that young people count among those populations that have large untapped entrepreneurial potential, due to structural barriers they face. YEPA’s aim is to bring together decision-makers and young entrepreneurs in a dialogue about possibilities to tackle and reduce these barriers. The report marks an important step towards this goal, presenting five key lessons learned and related policy pointers, as well as best practice examples from across European countries. Those policy pointers relate to the need for more tailored support, access to finance and networks, links to the green and digital transitions, and a culture of evaluation and monitoring practices.
In terms of training and education opportunities, the report highlights that many entrepreneurship programmes and measures do not sufficiently take into account the specific needs of young people. This is despite the fact that tailored support can lead to higher participation and success rates. To limit expenditure on overengineered initiatives, the authors suggest offering gradually intensifying support depending on the stage of entrepreneurship, implementing train-the-trainer initiatives, and co-creating entrepreneurship programmes with the help of relevant networks and organisations that can provide insights from lived experiences. One European scheme, that is not widely known but offers such tailored support, is Erasmus for Young Entrepreneurs, a mobility scheme that enables young business founders to learn from more experienced host mentors (see SwissCore article).
A lack of access to finance and entrepreneurial networks is further highlighted as an unequal barrier that young people encounter when trying to start their own business. According to the authors, it is not only inexperience and age which make these terrains more difficult to navigate, but also the prejudices encountered by young founders. Solutions identified include a more thorough exploration of alternative financing options including microfinance, matching private investments with public funding, and crowdfunding as well as embedding financial literacy in different educational levels. Regarding access to networks, which can serve as sources of motivation and capital, established entrepreneurial networks should be opened to the younger generation, while specialised youth networks should be further supported in parallel.
The report further acknowledges the specific social realities of young people, stating that they generally tend to be more vocal about sustainability concerns as well as engage more with digital technologies. The authors stipulate that young entrepreneurs therefore can and should be expected to engage with the green and digital transitions when starting their own businesses. Actionable steps towards this include dedicated training, including on public procurement, specialised financing instruments, as well as business and start-up challenges with a green and digital focus. Lastly, the report advocates for a stringent monitoring culture, where evaluations are deeply embedded in the full lifecycle of entrepreneurship training programmes.
Many of the ideas expressed by YEPA are echoed in the EC’s entrepreneurial competence framework, EntreComp (see SwissCore article): Entrepreneurship requires hard skills, such as financial competences, as well as soft skills and preferences, including risk appetite, networking skills and an understanding of the civic dimension of business ownership. Overall, these latest developments highlight once again the many pathways through which Europe can exploit its entrepreneurial potential better and ultimately become more competitive.