Oli Cavanagh is male, in his forties, and set up Flender, his innovative new business, because he spotted a gap in the market for a peer-to- peer lending platform for start ups. With more than 1,000 lenders having already advanced more than €500,000 to start ups in less than six months, he has been proven right.
Flender, which operates in Ireland only, has global ambitions and is poised to roll out across Europe as soon as the regulatory framework allows.
It already employs eight people but has higher aspirations. “We don’t know how many markets we will be in . . . for the main identified markets, we could be at about 100 people in three years’ time,” he said.
As such, Cavanagh’s tale tallies with all the main findings of the latest Global Entrepreneurship Monitor (Gem) report. The report, which is published annually, looks at total early-stage entrepreneurial activity, or TEA. This assesses the percentage of a country’s working age population that is either about to start a business, or has started one within the past three-and-a-half years.
This is the period that report co-author Paula Fitzsimons refers to as “the valley of death” for a business, “because it is the time an enterprise is most vulnerable to failure”.
Gem’s findings show Ireland is one of the most entrepreneurial countries in Europe, ranking fifth on the TEA Index. What’s more, entrepreneurship is now higher than it was before the recession.
During the Celtic tiger period, from 2003 to 2007, 8% of 18- to 64-year-olds were either actively planning to open, or had just opened, a new business. This fell to 7%, for the period from 2008 to 2012. Today it stands at 11%.
But what does the Irish entrepreneur look like? At 63% to 37%, men still outnumber women substantially, “but that gap is narrowing,” said Fitzsimons.
More than two-thirds of Irish entrepreneurs (71%) have a third-level education, and are relatively wealthy to begin with: 57% have household incomes that put them in the top third of the country.
Entrepreneurship is increasingly likely to be driven by perceived opportunity, as with Cavanagh, rather than out of necessity, with 87% of entrepreneurs saying opportunity was the driver for their new business and 13% saying they had no other choice. In the recession, the latter group accounted for a third of all early-stage entrepreneurs.
This resurgent sense of opportunity seems to be having a bearing on ambition. About 39% expect to be employing at least 10 people within five years and twice that number expect to be exporting within the same timeframe. More than one quarter (27%) export from the beginning.
Irish people are surprisingly supportive of entrepreneurship. Ireland scores highest in Europe in terms of the popular regard it holds for successful entrepreneurs — which conflicts with our vision of ourselves as a nation of begrudgers. Regard for successful entrepreneurs is higher in Ireland than in the US.
This level of regard could be linked to the finding that Irish entrepreneurs are more focused on job creation than those in most other European countries.
Irish entrepreneurs are increasingly outward looking, too: just one in five expects to have no revenue from customers outside of the domestic market, which is half the European average. This stands in contrast to the Celtic tiger era, when strong consumer demand meant twice as many Irish entrepreneurs were exclusively focused on the domestic market.
Ireland is currently benefiting from a demographic dividend in relation to entrepreneurship, the report found. Traditionally, the majority of nascent entrepreneurs and new business owners in Ireland have been aged from mid-twenties to mid-forties. Ireland currently has a bulge in this age bracket, which is helping to fuel enterprise activity overall.
The country is, however, seeing record high rates of entrepreneurship among older age groups. Ireland ranks second in Europe in terms of “senior entrepreneurship” — those aged 55 to 64.
In 2010 one in 20 people aged between 55 and 64 were early-stage entrepreneurs. In 2016, that had doubled to one in 10, a marked increase.
There are improvements in relation to the gender gap, too. The rate of entrepreneurship for women in Ireland is seventh highest in Europe and, at one in every 14 women, the number of entrepreneurs among women is now at its highest since the Gem research started in 2000.
Men and women still differ in terms of growth expectations, however, with 36% of male entrepreneurs and just 21% of female ones expecting to employ 10 or more people within five years.
If there is a warning sign from the Gem report, it is that the number of informal investors in Ireland remains stubbornly low, compared with other countries. Informal investors are those who provide funds to others that are starting a business. In this country they are more likely to be friends and family, rather than angel investors backing the businesses of strangers. Ireland ranks a poor 18th in Europe for informal investors.
The vast majority of informal investors — 90% — provided funds to friends or family. Only about 7% of informal investors could be classed as business angels. Gem estimates there were just under 8,000 business angels in Ireland in 2016.
For Stephen Dillon, who runs Startups.ie, an online support network for entrepreneurs, lack of angel finance is one of the most common issues about which other start ups contact him.
“There is a void. Angel investors are reluctant to take the risk involved in backing a start up. Sure, if you’re in fintech or healthtech, you’ll find someone, but otherwise, all I can do is direct people to the likes of Microfinance Ireland, which provides loans to start ups,” said Dillon.
A serial entrepreneur himself, Dillon believes a paucity of business angels might be a blessing in disguise. He recently launched a range of drinks under the brand Loki & Co, which is due to be stocked at Lidl. “Too many start ups get hung up on funding. I bootstrapped Loki & Co to get it to this point and I’m still not focusing on investors,” he said. “If you focus on getting the product right, the finance should look after itself.”