Who's an Entrepreneur?

More than 70 million people around the world either own or manage young businesses or are "nascent entrepreneurs," according to the sixth annual Global Entrepreneurship Monitor directed by Babson College and the London Business School.

The international study finds that the relationship between entrepreneurship and education varies based on a nation's wealth. In low-income countries, less-educated people tend to start businesses. In high-income countries, those with higher levels of education tend to. The reason, according to the researchers, is that in richer countries, better-educated people become entrepreneurs because they perceive promising business opportunities. In poorer countries, less-educated people start businesses out of necessity, while their more educated countrymen work for wages.

The study also finds that informal investment fuels entrepreneurship worldwide. Fully 99.9 percent of new ventures are launched without formal venture capital or support from wealthy "business angel investors." The entrepreneurs themselves provide 66 percent of the startup capital.

In the United States, 88 percent of the 500 fastest growing private companies got no financing from business angels. A third of the fastgrowers raised startup capital from family and friends.

Copyright New England Board of Higher Education Spring 2005
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