Sberbank : Russia overtakes 8 European countries in early-stage entrepreneurial activity

In the run-up to the 24^th St. Petersburg International Economic Forum, Global Entrepreneurship Monitor (GEM) has published the results of the largest global study on entrepreneurial activity, the 2020/2021 GEM Global Report. A research group from St. Petersburg University's Graduate School of Management has implemented the project in Russia over the past 15 years, with financial support from Sber since 2018.

As noted in the national report, the early-stage entrepreneurial activity index for Russia (characterizing the share of the working-age adult population involved in the establishment of a business or that already owned a business up to 3.5 years old) was 8.5% in 2020. This is 9% less than the 2019 results. In 2020, 60% of countries - primarily high-income - saw a reduction in entrepreneurial activity.

Russia surpassed a number of companies in early-stage entrepreneurial activity in 2020, including: Italy (1.9%), Poland (3.1%), Germany (4.8%), Spain (5.2%), Austria (6.2%), Sweden (7.3%), Norway (7.6%), and Great Britain (7.8%). The gap between this index value in Russia and the European average was negligible in 2020 - it was more significant up to 2016.

The percentage of those who have owned a business up to 3.5 years old is 4.7% of the working-age adult population. This is less than a year earlier, when the highest figure was reached (5.3%) during the period of observation for the study.

The number of Russians engaged in launching a business surpassed the number of those who closed their business by a factor of 1.8. Despite the pandemic, the entrepreneurial sector continued to expand.

Among the entrepreneurs who closed their business in 2020, 29% said the pandemic was the reason. The number of businesses closing due to insufficient financing has decreased over the past few years. In 2020, 6.2% of Russian respondents indicated this reason (the global average is 9.8%).

People residing in Russia consider launching their own business to be an opportunity to earn more or to implement their own ideas. Others are compelled to make this decision as they see no other way to produce an income. Early-stage entrepreneurs are primarily motivated by necessity (72%, global average - 59%). Motivations such as continuing a family tradition (16%) and the desire to change the world for the better (24%) are less popular in Russia than in other countries (30% and 43%, respectively). There are differences in motivation for men and women: in Russia, women indicate the need to produce an income as their motivation 10% more frequently than men.

The number of respondents who declared that they plan to open their own business in the next three years amounted to 11%, which is less than in 2019, but significantly higher than the figures for 2010-2018. This can in part be explained by the increased appeal of entrepreneurial activity. In 2020, 75% of respondents indicated that they consider an entrepreneur's career to be attractive, while 73% agreed that entrepreneurs enjoy a prominent position in society. The assessment of the status of the entrepreneur has improved over the past few years, which could be linked to increased coverage of success stories in the media.

Despite the positive trends, Russia is ranked low in the GEM with regard to self-perception: a mere 36% believe that they have the knowledge required to start and maintain a business.

The further rise of the number of people planning to start their own business could be related to a better evaluation of the conditions for starting a business in the region where they reside. Only one-third of respondents considered the conditions attractive. While 10% higher than last year's figure, this conditions assessment is one of the worst among the participating countries, with lower figures recorded only for Iran (13.3%), Spain (16.4%), Cyprus (21.1%), Israel (25%), Great Britain (27.3%), Greece (27.9%), and Austria (31.2%).

The coronavirus pandemic had an impact on the assessment of opportunities to start a business. Among both early-stage and established entrepreneurs in Russia, 56% agree that there are fewer opportunities for growth now, while 21% of early-stage entrepreneurs and 18% of established entrepreneurs admit that the pandemic created new opportunities to develop their businesses. In the majority of countries participating in the project, it is early-stage entrepreneurs that see more opportunities. Among those who are actively attempting to start a business, 55% state that the pandemic has led to delays in their operations.

In 2020, Global Entrepreneurship Monitor's representative sample featured 2,000 members of the working-age adult population in Russia.

Since 2018, we have been supporting the highly relevant work of our colleagues from St. Petersburg University. The GEM study provides a quality snapshot of entrepreneurial activity in Russia. The results reaffirm that one of the factors for successfully starting and running a business is having the necessary knowledge. Lifelong learning and development of new skills to adapt to constantly changing conditions are not only hobbies - they are now vitally important. A number of practical tools exist today, including BusinessClass, our free joint program with Google, which covers almost all key educational tracks. In five years, almost one million people have participated in the program nationwide.

Oleg Semenenko

Head of GR and Special Projects, Sberbank