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23 Jan

Webinar on Findings from the research on the start-up ecosystem in Europe

Event Webinar

During the session, EMN and MFC webinar presented the results of the research aimed at exploring the role of microfinance in providing financial services to start-up enterprises.

We discussed opportunities and challenges faced by the microfinance sector to more deeply engage in the entrepreneurship and start-up financing market. We also offered recommendations to support a greater involvement of MFIs in financing the business start-ups of excluded groups.

The study was jointly implemented by the European Microfinance Network (EMN) and the Microfinance Centre (MFC) in 11 countries within the Framework Partnership Agreement with the European Commission within the EaSI Programme. These studies ara available in our publications sections.


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  • Did you miss the webinar? Watch the recording of the session below

Microfinance and Business Start-ups Review of the Current Practice in Europe

Webinar on 23 January, 2018

How to participate:

To actively participate in the session, open the Participants panel from the toolbar in the bottom of the screen and the Chat box

In the beginning of the session, all participants are muted

If you wish to speak, please raise a hand or request to unmute you

If you wish to write a comment or a question, please type the message

How to participate:

To actively participate in the session, open the Participants panel from the toolbar in the bottom of the screen and the Chat box

In the beginning of the session, all participants are muted

If you wish to speak, please raise a hand or request to unmute you

If you wish to write a comment or a question, please type the message

Webinar session flow


• Nicola Benaglio, Policy and Research Officer, European Microfinance Network (EMN) n.benaglio@european-

Presentation of the key results

• Justyna Pytkowska, Research Manager, Microfinance Centre (MFC)

Q&A session


Research Objectives

Aim of the study:

• Exploring the conditions for business creation and start-up development and the role of microfinance vis-a-vis start-ups

Focus areas:

• the national strategies supporting entrepreneurship

• the role of governmental programs in supporting business creation

• overall financial and non-financial support offered to start-ups by financial institutions and other relevant actors

Start-up Ecosystem

Country level case studies:

• Desk study

• Interviews with key stakeholders

• Group discussion


Entrepreneurship and Start-ups

• Similar levels of enterprise ownership across the countries – 5-7% of adults run a mature business (more than 3.5 years old)

• Different level of engagement in early stage entrepreneurial activity (4-10% of adults) with Romania and the UK in the lead

• Large differences in the entrepreneurial intentions with Romania and Macedonia in the lead

6.2 7.0 6.2 5.2 6.1 5.5 7.2 7.5

5.2 4.6 4.8 4.4

8.8 7.9 6.5 10.8

5.1 6.2 7.1 10.1

9.1 15.1



Spain Germany Bulgaria Italy UK Hungary Macedonia Romania

Entrepreneurial Intention

Total early-stage Entrepreneurial Activity (TEA)

Established Business Ownership Rate

Business creation rate as % of adult population

Source: GEM 2016

Entrepreneurship and Start-ups

Motivation for starting a business

• Different motivations to start a business:

• Personal preferences to be self-employed – UK, Bulgaria, Italy, Germany, Spain

• No other work alternatives – Albania, Macedonia, Montenegro, Serbia












Neither of the two reasons

Combination of both

No other alternatives for work

Mainly through own personal preferences

Source: European Working Conditions Survey 2015

Entrepreneurship and Start-ups

Barriers to entrepreneurship and early- stage business development:

• Finding customers

• Access to finance

- Insufficient collateral

- Bureaucracy

• Starting a business conditions

- Number of procedures

- Time

- Cost

Source: Worold Bankąs Doing Business 2016






5 6

7 8

9 10

less than 2 years old

2 and more years

Severity of problems affecting young and mature SMEs







Starting a Business Score (Distance to Frontier)

Source: SAFE 2014

Start-up Ecosystem

• In every country studied a national strategy supports entrepreneurship, but the nature and scope varies among the member states.

• Focus on:

• Innovation, STEM industries

• Specific target groups

• Business creation (start-ups) or growth of mature firms

• Ecosystems for start-ups exist in every country and include a variety of institutions, public and private

• Funding for start-up support from public sources (national budgets, EU programs, non-EU foreign aid, EU country-to-country) and private (own funds of commercial banks, non-profit and not-for-profit institutions

Start-up Ecosystem

Source/Implementer State institution Commercial company

Non-profit, not for profit

Public (national, EU, international)

Employment offices Business development agencies Development funds Entrepreneurship centres

Banks Business incubators

MFIs (Bulgaria, Germany, Hungary, Italy, UK)

Private X Banks MFIs (Albania, Bulgaria, Hungary, Macedonia, Montenegro, Romania, Serbia, Spain, UK)

Microfinance in Europe and Start-ups

• 77% of MFIs serve business start-ups and 16% of MFIs serve pre-start-ups

• Start-ups usually constitute less than 40% of the clients, although in case of 19% of MFIs start-ups are a predominant client group.

• In terms of the numbers, the majority of MFIs serve less than 1,000 start-ups each

• MFIs in Western Europe are more involved in serving start-ups











Eastern Europe Western Europe

>1,000 clients

500-1,000 clients

100-500 clients

1-100 clients


Source: Microfinance in Europe: A Survey of EMN-MFC Members. Report 2014- 2015

Distribution of MFIs by share and number of pre-startups and start-ups among business clients

Start-up Ecosystem

Approach Examples of MFIs

Predominant focus on business start- ups

Youth Enterprise Scotland Seed Capital Bizkaia Micro

Mix of start-ups and operating business clients

Most of the MFIs

Ad hoc or special projects for business start-ups

Besa Fund

No start-ups among MFI clients About a quarter of the MFIs

Degrees of MFI involvement in serving start-ups:


• Lack of clarity what is considered a start-up – No common definition makes it difficult to understand and compare

the approaches of institutions

• Limited access to funds – State funds committed to start-ups are used by state institutions, EU

funding is difficult to access by small MFIs

• Undermined sustainability of MFIs – High cost of serving start-ups aredifficult to recover without subsidies

• No products and services – No special products responding to the needs of businesses not

generating positive cash flow from the start


• Limited capacity – No skills and methodology for assessing businesses without business

track record and credit history

• Limited non-financial services – MFI non-financial services available only in a few countries, rarely seen

in Eastern Europe

• Legal and regulatory sphere – Legal restrictions in several countries are a barrier to sector


Options for Strenthening the MFI Role in Start-up Ecosystem

• Definition of a ‘start-up’ – Develop the common grounds for categorising businesses according to

their growth stage, rather than age

• Access to funding – Enable access to low-cost or free public funds – national and EU - to

reach more start-ups at an affordable price

• Risk support – Enable access to guarantee funds (national or EU) to reduce MFI risk


Options for Strenthening the MFI Role in Start-up Ecosystem

• Financial products to better match the needs of start-ups – Develop products that combine features of a cash flow loan and equity


• Know-how on assessing risk – Develop alternative credit scoring tools that allow to assess risk in

absence of business history

• Business support services for start-ups – Add non-financial services to equip entrepreneurs with business skills


Read more …

• To read more, please visit MFC website to download the research paper:

Microfinance and Business Start-

ups: Review of the Current Practice

in Europe


Thank You!

This research has received financial support from the European Union Programme for Employment and Social Innovation "EaSI" (2014-2020). For further information please consult:

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One of the many functions of the European Microfinance Network (EMN) is to organise debates and webinars addressing a wide range of subjects pertinent to microfinance in Europe. These activities are a chance to foster an exchange of ideas among different partners, and contribute to spreading knowledge of microfinance throughout Europe.
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