Most of World’s Financing for SMEs Came from China
This is interesting:
A new Ernst & Young study produced for the G20 Young Entrepreneur Summit in Mexico City found that while small to medium-sized enterprises (SMEs) accounted for 50% of employment in most G20 countries, total investment in small businesses in 2010 came in at about US$714-billion, 6% of the US$11.5-trillion in total investments made in the G20.
Of that total, 56%, or US$400-billion, came from China, largely through bank lending. (Also the case in much of the rest of the G20).
Canada is near the bottom of the pile with about US$2.2-billion in total SMB investment, but more than 60% of that actually came from venture capital and IPOs.
The main reason financing has evaporated in Canada these past few years is a lack of an exit strategy for investors, “When funds invest, they want to eventually exit those investments and make a lot of money. There are really two vehicles for this: IPOs and M&A transactions,” said Mr. Richard Remillard, executive director with Canada’s Venture Capital and Private Equity Association.
The past four years have been largely devoid of IPO activity. And when it comes to M&A , many larger firms, particularly in the technology sector, have been sitting on their capital. “When the exit environment improves, investment volumes will pick up,” he said.
Colleen McMorrow, entrepreneurial services leader with Ernst & Young in Canada, said China has benefited from a booming venture capital and IPO industry that has helped spur entrepreneurial investment, but there are concerns a hard landing in China will affect inflation and interest rates and therefore bank lending.
“But the fundamentals of entrepreneurship are strong and that’s what we’re seeing reflected in the numbers from this report,” she said.
From the Financial Post