EC-OECD financing start-up seminar 27-29 June2012 (Trento, Italy) - Key conclusions by Jonathan Potter, Senior Economist, OECD LEED Programme


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Presentation from the capacity building seminar “Financing business start-up by under-represented groups”, 27-29 June 2012, Trento – Italy; organised by the Local Economic and Employment Development (LEED) Programme and its Trento Centre at the OECD in collaboration with the Directorate-General Employment, Social Affairs and Inclusion of the European Commission. See

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EC-OECD financing start-up seminar 27-29 June2012 (Trento, Italy) - Key conclusions by Jonathan Potter, Senior Economist, OECD LEED Programme

  1. 1. EC-OECD Financing Start-Up Seminar - Key Conclusions1. Importance of entrepreneurship in ESF programmes• Entrepreneurship is an avenue for economic recovery and job creation; critical at a time of high unemployment.• There is under-exploited potential in disadvantaged (youth, unemployed, handicapped) and under-represented groups (women, seniors).• Support should be focused on the barriers facing these groups : lack of access to loans, poor financial literacy, lack of credit history, negative attitudes to entrepreneurship, weak entrepreneurship skills• These people have different needs and need adapted or specialised support
  2. 2. EC-OECD Financing Start-Up Seminar - Key Conclusions2. Entrepreneurship support systems are more effective than individual actions• A weakness of current support is a series of disconnected, short- term measures with only partial coverage of the needs• Integrated programmes fill gaps and make links, ensure that bottlenecks are addressed• Measures are needed across the whole entrepreneurship ‘life cycle’: orientation/gestation; start-up; growth/crisis – with clear ways forward and increasing intensity• A menu of measures exists from previous programmes, e.g. EQUAL: training, business development services, access to finance, access to markets, legal frameworks, welfare bridge, entrepreneurship education• An action planning process can be used to conceive the system and involve stakeholders
  3. 3. EC-OECD Financing Start-Up Seminar - Key Conclusions3. A foundation of specialist intermediaries must be nurtured• Some of the most successful interventions have been realised through specialist agencies like IQ Consult and Fair Finance• They have understanding of the market, ability to reach the target groups and a drive to innovate• ESF support can be used to generate these types of new business model• It is important to scale up the best initiatives of this kind – and share best practice models
  4. 4. EC-OECD Financing Start-Up Seminar - Key Conclusions4. Microfinance initiatives are needed• Finance is one of the biggest barriers to start-up – for living expenses (welfare bridge) and business expenses (grants and loans)• Most current ESF programmes use grants – but these not as efficient as loans; they are expensive to the public and do not use private sector expertise• Traditional banks are unlikely to enter the microfinance loan market – their model is of low interest rates and low transaction costs; but misses those with no credit history• Interest rates are not the key factor in success – outreach is more important
  5. 5. EC-OECD Financing Start-Up Seminar - Key Conclusions5. Evaluation has a central role to play in programme development• Ex ante evaluation results must be attached to the Partnership Contract• It must include data on the rationale for proposed actions, indicators for monitoring and estimates of expected results• Logical frameworks are the key tool, together with appropriate indicators• Bear in mind the counterfactual