Romanian entrepreneurs’ access to funding
25 September 2014
Page 2
About the study “Romanian entrepreneurs’ access to funding” – 10 conclusions
The second edition of the study examines the perceptions of 125 entrepreneurs regarding the funding environment in
Romania, 56% of them owning companies with a turnover of less than EUR 1 million, 23% companies with a turnover
between EUR 1-15 million and 21% of them a turnover exceeding EUR 15 million.
The percentage of companies whose funding application has been denied is down 6 percentage points from last year,
which gives a positive signal to entrepreneurs and entrepreneurial companies looking for funding.
Funding destined for investment register a spectacular increase, exceeding 60% of the total.
Most companies haven’t changed their sponsor for the last two years, which suggests either a lack of options or the fact
that they are satisfied with the terms of the obtained funding. The entrepreneur who changed his sponsor the most said that he
made such a change no less than 8 times in the last two years.
70% of entrepreneurs are constantly monitoring their level of debt . For other 20% of respondent companies, the monitoring
of debt level is done by an employee other than the entrepreneur, 9% do not monitor indebtedness, while only 1% said they did
not know how they could monitor this indicator.
The study is based on a survey undertaken during 26 August -19 September 2014. Most of the 125 respondents are young
entrepreneurs, under the age of 40.
1
2
3
4
5
Over half of Romanian companies that accessed funding said they received the latest round of funding last year, while
the share of those who received their last funding more than four years ago decreased. Companies are beginning to finance
their business needs in an accelerated mode, as the funding and investment environment improves.
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About the study “Romanian entrepreneurs’ access to funding” – 10 conclusions
Bank credit continues to remain the most important source of funding for entrepreneurs, but the trend is decreasing (-
10 percentage points) compared to last year.
The second most important source of funding considered by entrepreneurs is represented by European funds. State
aid represents only to a very small extent an option to fund entrepreneurial projects, despite the Romanian state’s efforts to
implement various aid schemes.
The decisive factor for entrepreneurs in choosing a funding offer represents, as last year, maintaining independence in
business decisions (36% of respondents), followed by the lowest cost (23%) and quality of guarantees (17%).
The responses emphasize how important is personal independence for the surveyed entrepreneurs, in an even higher extent
compared to the last edition, which for sponsors is an indicator of an increased need for confidence in the decisions of the
entrepreneur
In terms of ease of attracting funding, entrepreneurs believe that the IT sector continues to be in the first position, registering
however a sharp drop compared to last year's responses, from 39% in 2013 to only 25% in 2014. Other sectors taken into
account - agriculture, green energy and production are all perceived positive regarding attractiveness for sponsors.
For most of the entrepreneurs, the quality of the business plan remains, the most important factor in obtaining funding
(31%). The business idea remains last in order of importance, but records the fastest growth, by 5 percentage points, reaching
14%. Between the two extremes, responses included the quality of the team and previous experience of business, financial
history and quality guarantees.
6
7
8
9
10 Romanian entrepreneurs are not very optimistic about the prospects of accessing funding, in terms of influence of the
economic development. More than half of the entrepreneurs who answered the survey consider the evolution of the economy
in 2014 will not have a positive effect on access to funding.
Page 4
Latest funding round
obtained by entrepreneurs
Page 5
Question 1
► Bank lending to companies shows signs of recovery, with an increase of 9 percentage points in the new edition of the survey “Romanian
entrepreneurs’ access to funding”, compared to the previous edition, in September 2013. Also, accessing European funds almost doubled
its share in responses, with an increase from 5% to 9%.
► Other sources of funding have evolved heterogeneous, partially explained by the declining share of startups among companies responding
to the survey, compared to the 2013 edition (for example, in the 2014 edition funding from friends and family decreased).
► It is noted that investors and sponsors specific to mature markets such as venture capital, capital markets and crowd-funding are almost
nonexistent among the answers given by Romanian entrepreneurs.
Total responses 2014 edition: 77
(Skipped this question: 30)
Where did you receive your latest funding round from? (single answer)
0%
5%
10%
15%
20%
25%
30%
35%
40%
2013
2014
Page 6
Question 2
► Over half of Romanian companies that accessed funding said they received the latest round of funding last year, while the
share of those who received their last funding more than four years ago decreased. Companies are beginning to finance
their business needs in an accelerated mode, as the funding and investment environment improves.
► The proportion of entrepreneurial companies that have obtained funding in the last half of the year remains at 33%, as in the
previous edition of the survey.
How long ago did you get your last funding? (single answer)
Total responses 2014 edition: 111
Of which, 94 – obtained funding
(Skipped this question: 14)
33%
18% 19%
11%
19%
33%
22%
15% 14%
16%
0%
5%
10%
15%
20%
25%
30%
35%
Less than 6months
Between 6months - 1 year
Between 1 - 2years
Between 2 - 4years
More than 4years
2013
2014
Page 7
How large was your latest funding round? (single answer)
Question 3
► If last year more than half of the respondents had obtained a small grant, of less than EUR 25,000, this edition registers an
increase in the level of funding: over half of the respondents obtained less than EUR 100,000.
► Moreover, all the larger ranges of funding reached higher values, except the range between EUR 500,000 to EUR
1,000,000, which stalled. The largest increase was recorded by funding that is over EUR 1 million, from 11% to 23%.
Total responses: 111
(Skipped this question: 14). Companies that said they did not receive funding were excluded.
0% 10% 20% 30% 40% 50% 60%
Less than 25.000 EUR
25.000-100.000 EUR
100.000-500.000 EUR
500.000-1.000.000 EUR
More than 1.000.000 EUR
2014
2013
Page 8
Your last funding round was destined for: (single answer)
Question 4
► Funding destined for investment recorded a spectacular growth, exceeding 60% of the total.
► The percentage of funding destined for new business initiatives fell to 11% from 28% last year.
Total responses: 74
(Skipped this question: 33). Companies that said they did not receive funding were excluded.
3%
28%
27%
42%
1%
11%
25%
63%
0% 10% 20% 30% 40% 50% 60% 70%
Other purpose
Start-up
Working capital
Investitions
2014
2013
Page 9
What was the result of your last attempt to obtain funding? (Single answer)
Question 5
► Among those who tried to access funding instruments, the percentage of those who obtained 100% of the amount they
needed fell by two percentage points, but the percentage of those who obtained more than 50%, but not the full amount,
increased by 15 percentage points.
► Note that the percentage of those who were declined funding decreased, which gives a positive signal to entrepreneurs and
entrepreneurial companies looking for funding.
Total responses 2014 edition : 111
(Skipped this question: 14)
49%
10%
20%
21% Finantare 100% din catam cerut
Finantare >50%
Mai putin de 50%
Am fost refuzat
2013 2014
47%
25%
13%
15%
100% of the fundingasked for
Funding > 50%
Less than 50%
I was declined funding
Page 10
Entrepreneur – funding
provider relationship
Page 11
Entrepreneur – funding provider relationship
In the past two years,
entrepreneurs have changed
their funding provider
0.5 times, on average.
2,7
The average number of interactions
between entrepreneurs and their
funding provider during one month.
Questions 6 & 7
► Most companies haven’t changed their funder for the last two years, which suggests either a lack of options or the fact that
they are satisfied with the terms of the obtained funding. The entrepreneur who changed his funding provider the most
compared to the rest of the survey’s respondents said that he made such a change no less than 8 times in the last two years.
► On average, Romanian entrepreneurs talk to their funding provider every 10 days, but there are entrepreneurs who consult
their funder daily, whether it is a bank, investment fund, angel investor or other type of investor.
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Do you constantly monitor the level of debt of your company? (single answer)
Question 8
► 70% of entrepreneurs are constantly monitoring their level of debt. For 20% of the entrepreneurial companies, the monitoring
of debt level is done by an employee other than the entrepreneur, 9% do not monitor indebtedness, while only 1% said they
did not know how they could monitor this indicator.
Total answers: 101
(Skipped this question: 24)
No 9%
Do not know how to
monitor this indicator
1%
Yes 70%
Task of an employee
other than the entrepreneur (accountant,
chief financial officer)
20%
Page 13
Funding for Romanian
entrepreneurs
Page 14
Do you think that macroeconomic trends in Romania will have a
positive effect on access to funding for businesses this year? (Single answer)
Question 9
► Romanian entrepreneurs are not very optimistic about the prospects of access to funding in the future. More than half of the
entrepreneurs who answered the survey consider that the macroeconomic trends of 2014 will not have a positive effect on
access to funding.
Total responses 2014 edition: 102
(Skipped this question: 23)
11%
27%
21%
33%
8%
0%
5%
10%
15%
20%
25%
30%
35%
Definitely yes Probably yes Definitely not Probably no Do not know
Page 15
Question 10
► In terms of access to funding, 82% of entrepreneurs find it difficult or very difficult, a downward trend relative to the number
of entrepreneurs who have responded to the Entrepreneurs Speak Out: Romanian Entrepreneurship Barometer 2013, which
analyzed responses collected at the end of 2013.
► At EU level, the percentage of those dissatisfied with access to funding in 2013 amounted to 77%, according to the EY report
G20 - The Power of Three.
Total responses 2014 edition: 111
(Skipped this question: 14)
Do you considered that funding is generally readily available for entrepreneurs in Romania? (Single answer)
8%
1%
4%
51%
36%
9%
1%
8%
53%
29%
0% 10% 20% 30% 40% 50% 60%
Cannot say
Very easy
Easy
Difficult
Very difficult
2014
2013
Page 16
What is the institution you turn to in order to fund an entrepreneurial project? (Single answer)
Question 11
► Bank credit remains the most important source of funding for entrepreneurs, but the trend is decreasing (-10 percentage
points), falling below 50% of preferences.
► A second source of funding for entrepreneurs in order of importance are European funds. State aid represents only to a very
small extent (1%) an option to fund entrepreneurial projects, despite the Romanian state’s efforts to implement various aid
schemes.
Total responses 2014 edition 111
(Skipped this question: 14)
52%
14% 14%
10% 9%
1%
42%
26%
13%
5%
13%
1%
0%
10%
20%
30%
40%
50%
Bank Europeanfunds
Joint venture Other Did not needfunding
State funds Do not know
2013
2014
Page 17
You need funding for: (Single answer)
Question 12
► Similarly to question 4, there is a growing interest for investments from Romanian entrepreneurs, more than half of the
funding being contracted for this purpose. The fact that entrepreneurs take into account funding such a purpose indicates
positive expectations regarding market demand for the product/service offered.
Total responses 2014 edition: 111
(Skipped this question: 14)
1%
20%
11%
20%
49%
0.9%
9.0%
14.4%
21.0%
54.1%
0% 10% 20% 30% 40% 50% 60%
Other purpose
Start-up
Do not need funding
Working capital
Investitions
2014
2013
Page 18
What is the deciding factor that would influence your choice of funding source? (single answer)
Question 13
► The decisive factor for entrepreneurs in choosing a funding offer represents, as last year, maintaining independence in business decisions
(36% of respondents), followed by the lowest cost (23%) and quality of guarantees (17%).
► Perhaps surprisingly, the only factor registering a decreasing trend in choosing a funding source is represented by the lowest cost - which
indicates that funding became more accessible in terms of cost.
► The responses emphasize how important is personal independence for the surveyed entrepreneurs, in an even higher extent compared to
the last edition, which for sponsors is an indicator of an increased need for confidence in the decisions of the entrepreneur.
Total responses 2014 edition: 102
(Skipped this question: 23)
30% 29%
17%
13%
11%
36%
23%
17% 16%
9%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Maintainingindependence in
businessdecisions
Lowest costs Guaranteesrequired
The simplestprocedure
I have no definingselection criteria
2013
2014
Page 19
What would be the main reason for which you would accept an investor in the organization? (Single answer)
Question 14
► The surveyed entrepreneurs would accept an investor in the company primarily considering access to additional financial
resources, which means that 36% of them would directly consider a financial investor. The rest of them, representing 65%,
would primarily accept a strategic investor, given the need for access to new markets, know-how, suppliers and new
customers.
► The growing need for financial resources, coupled with a lack of willingness to give up independence in business decisions
indicate an openness towards financial investors interested in minority stakes.
Total responses 2014 edition: 102
(Skipped this question: 23)
29%
27%
22% 21%
1%
36%
23% 22%
15%
4%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Financialresources
Access to newmarkets
Access to know-how
Access to newsuppliers and
clients
Other
2013
2014
Page 20
What do you think is the sector which can most easily get funding? (Single answer)
Question 15
► In terms of ease of attracting funding, entrepreneurs believe that the IT sector is registering a sharp drop compared to last
year's responses, from 39% in 2013 to only 25% in 2014. However, this sector is still perceived as the easiest to attract
funding of the analyzed sectors.
► Other sectors taken into account - agriculture, green energy and production are all perceived positive regarding
attractiveness for sponsors. By contrast, services show a decreasing trend, while production increased by 9 percentage
points in terms of attractiveness.
Total responses 2014 edition: 102
(Skipped this question: 23)
1%
8%
3%
5%
8%
13%
21%
39%
2%
3%
5%
5%
17%
18%
25%
25%
0% 5% 10% 15% 20% 25% 30% 35% 40%
Altul
Servicii
Nu stiu
Educatie
Productie
Energie verde
Agricultura
IT si online
2014
2013
Page 21
What factor do you think is most important in obtaining funding? (Single answer)
Question 16
► For most of the entrepreneurs, the quality of the business plan remains, the most important factor in obtaining funding. The
business idea remains last in order of importance, but records the fastest growth, by 5 percentage points, reaching 14%.
Total responses 2014 edition: 102
(Skipped this question: 23)
36%
27%
14% 14%
9%
31%
24%
16% 15%
14%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Business plan The team andpreviousbusiness
experience
Guarantees Financial history The businessidea
2013
2014
Page 22
Do you consider crowdfunding an option for financing? (Single answer)
Question 17
► One in two respondents consider crowdfunding to be a funding option.
► Raising financing through crowdfunding begins to be perceived as a viable tool for Romanian entrepreneurs: the number of
those who consider crowdfunding a funding option increased by 10 percentage points.
► Crowdfunding represents a financing tool usually based on small amounts of money collected through the Internet from a
large number of people for a project initiated by individuals or organizations. The projects often fall into creative and
innovative categories.
38%
34%
28% Da
Nu
Nu stiu ce estecrowdfunding-ul
Total responses: 74
(Skipped this question: 33)
2013
48%
25%
27% Yes
No
2014
Page 23
Government support
Page 24
How would you assess the government’s role in facilitating access to funding for entrepreneurs? (Single answer)
Question 18
► To a great extent, 72% of entrepreneurs believe that the government does not facilitate access to finance for entrepreneurs,
while 6% consider it neither facilitates nor prevents funding.
► Governments can assist entrepreneurs in access to funding, among other, through loan guarantees, aid schemes, simplified
rules for small companies and more, while also by stimulating investment into small businesses through fiscal instruments.
Total responses 2014 edition: 111
(Skipped this question: 14)
10%
8%
7%
75%
13%
9%
6%
72%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Cannot say
Good and Very Good
Neutral
Lousy si Very lousy
2014
2013
Page 25
What are the 3 most important areas that the government should focus on and improve access to finance for entrepreneurs? (Multiple answer)
Question 19
► Entrepreneurs indicated several areas that the government should focus on to improve access to finance: in the first place
they elected tax incentives for investment in small companies, secondly, streamlined and more efficient regulatory business
systems leading to less bureaucracy, and thirdly, providing funds for financing schemes.
Total responses 2014 edition: 110
(Skipped this question: 15)
Only answers that have gathered over 5% are shown
3%
12%
8%
8%
9%
9%
11%
15%
5%
6%
8%
9%
10%
11%
14%
15%
0% 2% 4% 6% 8% 10% 12% 14% 16% 18%
Investments in infrastructure
Guarantees for loans
Promoting a business environment with few disputes
Reduced tax on capital gains
Providing funds for financing schemes
Simplified and more efficient regulatory systems forbusinesses
Promoting efficient and fair labor laws
Tax incentives for investments in small companies
2014
2013
Page 26
Demographics The results of this study reflect responses to EY’s survey
during 26 August – 19 September 2014, from 125
Romanian entrepreneurs.
Page 27
Demographics
Do you own a business at the moment? Have you owned a business in the past 2 years?
89%
11%
Yes
No
82%
18%
Yes
No
Page 28
The worth of your company: What is the position you hold within the
company?
Demographics
56%
23%
10% 6% 5%
0%
10%
20%
30%
40%
50%
60%
< 1 M EUR 1-14,9 MEUR
15-49,9 MEUR
50-99,9 MEUR
> 100 MEUR
6%
21%
30%
43%
0% 10% 20% 30% 40% 50%
Other
Executive Director / VicePresident / OperationalDirector / Middle Mgmt
Active associate
Chairman of the Board /President / General Director /
Sole shareholder
Page 29
What age group do you belong to? What sector does your company/group of companies
activate in?
Demographics
16%
41%
43% 18-29 years old
30-40 years old
Over 40
1% 1%
1% 1% 1% 1%
2% 2%
2% 2% 2%
3% 3%
3% 3%
4% 4%
5% 6% 6%
8% 8%
9% 13%
13%
0% 2% 4% 6% 8% 10% 12% 14%
Telecom
Mining and metals
Consumer Products
Pharma
Oil and Gas
Chemical industry
Electrical and electronic equipment
Furniture
Tourism and hospitality industry
Industrial machinery
Energy
Agriculture
Transportation
Heavy Industry
Financial services
Textiles
Medical services
Construction
Automotive
Other
Media and advertising
Food, beverages, tobacco
Business services
Retail or Wholesale
IT, Software, Internet
Page 30
Project team
Page 31
Project team
Elena Badea Head of Market Enablement
EY Romania
Mihaela Matei Special Projects
Communication Officer
EY Romania
Coordinator of the EY study
Entrepreneurs Speak Out
We would like to thank our partners Wall-Street.ro, BusinessDays.ro,
DoingBusiness.ro and Romania Business Leaders Foundation for their
support in conducting this study.
Page 32
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