The Spanish Entrepreneurship Observatory (also known as RED GEM España) and ENISA (National Innovation Company), in collaboration with the Mapfre Observatory of Sustainable Finance and the Secretary of State for Digitalisation and Artificial Intelligence, with the support of the High Commissioner for Spain: Entrepreneurial Nation, presented the Global Entrepreneurship Monitor (GEM) Spain 2020-2021 Report today. The report highlights the latest information on the Spanish entrepreneurial ecosystem.
The presentation of the report took place in the Auditorium of the Mapfre Foundation and was streamed via the Observatory's website.
Prepared by a research team of more than 180 people from all over the country, with data obtained from 26,075 surveys of the population aged between 18 and 64 and interviews with 36 national experts, this study highlights the main characteristics of Spain’s entrepreneurial dynamics from 2020-2021.
Entrepreneurship comes to a halt
The COVID-19 crisis brought entrepreneurial activity to a standstill in 2020. The Total Entrepreneurial Activity Rate (TEA) came in at 5.2%, a one percentage point fall due to a reduction in new initiatives (between 4 and 42 months of activity).
"TEA in Spain is still far from the EU average of 8.1 %, but with a fall of 0.9 percentage points less than the EU average of 1.5 points,” according to Ana Fernández Laviada, president of the GEM. “This decline is not as sharp as experienced in 2019, but is expected to continue at least in 2021 mainly due to the delay in the decision to start a business that usually occurs in times of insecurity.”
Uncertainty is also the main factor in business growth expectations: 15 % of the businesses involved in the start-up phase (TEA) and 20% of established business express this in their hiring expectations.
By age group, the most affected population is the 35-64 group; TEA fell by 3 percentage points and the greatest effects of the crisis were felt equally by both men and women.
The effects of this change in entrepreneurial intentions can also be seen in the motivation for business start-ups. “Earning a living because work is scarce" is the main motivation, rising from 47% in 2019 to 72% in 2020, thus breaking the trend observed in the last few years. This standstill in entrepreneurial activity is more noticeable in the case of women, given that in 2019, convergence in TEA and an almost equal proportion in all phases of the entrepreneurial process had been achieved, with 48% of new initiatives led by women. This trend was broken in 2020, being more evident in start-up (less than 4 months) or potential initiatives, where women barely exceed 40%, according to José Bayón, CEO of ENISA.
Other data to highlight from the study:
- The standstill in 2020 is expected to be more pronounced in 2021, since the trend and intention indicators show that only 16.5% of the Spanish population perceive opportunities for entrepreneurship in the next six months, which is a much lower percentage than in 2019 (36.1 % of the population) and far below the EU average (40.5%). This is the indicator most affected by the COVID-19 crisis showing, beyond doubt, the uncertainty and concern of the Spanish population regarding its development.
- In addition to this, half of those who start up a business (50.8%) express fear of failure when launching a business - a figure that rises to 64% for the average population, which is far from the EU average of 46%. The prolonged situation of stagnation and uncertainty will also hinder launching new initiatives in 2021. When analysing the COVID situation in particular, 31.5% of entrepreneurs in the TEA phase (less than 3.5 years in business) and 28.5% of established businesses (more than 3.5 years) consider that the crisis has created new business opportunities. In 2020, personal savings have been the unquestionable main focus of seed capital for new businesses, increasing by 10 points compared to 2019 and representing 64.5% of the funds used in the creation of new businesses.
- TEA initiatives are mainly small in size, providing business and consumer-oriented services (approximately 77%) in a similar way to the average of European and high-income economies.
- Both the initiatives and their innovations are aimed at the local market, with only 5.6% targeting more than 25% to foreign markets. It is in this international expansion that there are still significant differences with the average for European countries (17.5%) and far behind countries that are export-oriented in more than 20% of initiatives, such as Canada, Croatia or Sweden, or even Germany's 14.3%.
- On a positive note, despite being small in size, 41% of the businesses that are in the start-up phase expect to have between 1-5 employees, 10% expect to have more than 6 employees, and 3% more than 20, a figure similar to 2019 and which represents a hopeful outlook in times of crisis.
About GEM and GEM Spain
Global Entrepreneurship Monitor (GEM) is a consortium of national country teams, primarily associated with top academic institutions, that carries out survey-based research on entrepreneurship around the world. GEM is the only global research source that collects data on entrepreneurship directly from individual entrepreneurs! GEM’s Adult Population Survey (APS) provides analysis on the characteristics, motivations and ambitions of individuals starting businesses, as well as social attitudes towards entrepreneurship. The National Expert Survey (NES) looks at the national context in which individuals start businesses.
In numbers, GEM is:
- 22 years of data
- 150,000+ interviews a year
- 100+ economies
- 500+ specialists in entrepreneurship research
- 300+ academic and research institutions
- 200+ funding institutions
GEM began in 1999 as a joint project between Babson College (USA) and London Business School (UK). The consortium has become the richest resource of information on entrepreneurship, publishing a range of global, national and 'special topic' reports on an annual basis.
Within the framework of this global project, the Spanish Entrepreneurship Observatory, known until 2019 as Asociación RED GEM España, is currently organised into 19 regional and 7 provincial teams, which cover and represent the entire national territory and it has more than 180 researchers and prestigious experts in entrepreneurship from the main Spanish universities. Thanks to the support of ENISA, a public entity attached to the Ministry of Industry, Trade and Tourism, and more than 200 institutions and companies, the regional teams produce annual reports and studies that serve as a source and inspiration for the definition of entrepreneurship policies.
ENISA, National Innovation Company
ENISA is a public company attached to the Ministry of Industry, Trade and Tourism, through the Directorate General for Industry and Small and Medium-sized Enterprises, which since 1982 has been actively involved in the financing of viable and innovative projects, driven by SMEs and entrepreneurs. ENISA has disbursed more than 7,000 loans to more than 6,300 companies, for a total amount of more than 1.1 billion euros invested.