STATE OF THE FIELD IN YOUTH ECONOMIC OPPORTUNITIES

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Table of Contents Chapter 9 Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 10 Chapter 11 Chapter 12 Chapter 13 Chapter 14 Chapter 15 Annexes 2012 State of the Field in Youth Economic Opportunities Chapter 3: Growth-Oriented Business 3.2 Growth-Oriented Entrepreneurs Need Investors, Access to Publicity, and Mentors in a Comprehensive Package of Support All entrepreneurs need support to get started and become successful; this is particularly true of growthoriented entrepreneurs whose companies may grow very rapidly. • Financial capital ranks high on the list of support that growth-oriented entrepreneurs need though many believe that other types of support can be just as valuable. Chris Haughey, Co-Founder of Tegu, a toy company based in Honduras and highlighted in Box 3.2.1, found that interacting with seasoned professionals while seeking financing was critical to his company’s start-up. Networking events and business plan competitions, even when their plan didn’t win, provided the company’s founders with opportunities to connect with mentors and investors. He noted that non-elite Honduran entrepreneurs do not have access to those types of events, activities, or mentors. Youth Economic Opportunity programs have a role to play in filling this gap. • Publicity also assists young entrepreneurs to raise the visibility of their products or services and attract new clients. Tegu found that one press exposure tended to generate more, thus attracting new clients to the company. • Youth Business International (YBI) found that young entrepreneurs benefit from exposure to role models who come from similar circumstances. Rather than Bill Gates, a successful peer can both motivate a young person to start up in business and act as an effective role model. YBI’s key insight is that in-person mentoring can reduce the risk of lending to young entrepreneurs and increase their performance as well as their confidence in business. This is especially relevant to high-growth potential entrepreneurs. 3.2.1 Voices: Young Social Entrepreneur Starts a Growth-Oriented Business in Honduras Chris and Will Haughey, two young entrepreneurs, left their corporate jobs to start Tegu, a toy company that makes blocks from sustainably harvested wood. Tegu set out of prove that a world class product can come out of a developing country and that a forprofit business could transform societies in countries like Honduras, with crippling levels of chronic unemployment. The brothers were moved both by the environmental implications of deforestation and the plight of trash-pickers working in a municipal garbage dump outside of the country’s capital city, Tegucigalpa. Tegu takes a three-prong approach to alleviating social problems. This includes: • Creating jobs for adults through the manufacturing of toys; • Supporting the sustainable forestry of tropical hardwoods; • Educating children from trash-picking communities in Tegucigalpa. Chris Haughey noted, “Our education helped us access the network we needed to get the company started. I can’t imagine we could have done what we did without that education.” For more information about Tegu, see www.tegu.com. 56
Table of Contents Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Chapter 11 Chapter 12 Chapter 13 Chapter 14 Chapter 15 Annexes 2012 State of the Field in Youth Economic Opportunities Andrew Fiddaman, Managing Director for Youth Business International, reminds us that “no one ever starts a big business. No one ever wakes up and says I’m going to hire 100,000 people. Grow organizations and companies with support.” 3.2.2 Research Spotlight: “Youth Entrepreneurship: Closing the Gap” from YBI YBI launched a new publication, “Youth Entrepreneurship: Closing the Gap”, at the 2011 Global Youth Economic Opportunities Conference. The publication features nine case studies that illustrate how the finance gap can be closed for young entrepreneurs through providing non-financial support, such as training and mentoring. Alongside YBI, the report features TechnoServe, IYF and Silatech and finds that an “integrated approach reduces the risk of lending to youth and other underserved demographics, and the value of the non-financial support substitutes for collateral and other types of guarantee.” The value of non-financial support is increasingly being recognized by members of the financial services community who are entering into partnerships with NGOs to provide a comprehensive support package that increases access to finance for young entrepreneurs. To access the publication, go to www.youthbusiness. org/media/publications.aspx. Chapter 3: Growth-Oriented Business 3.3 AGYW Require Specialized Support to Make the Jump from Entrepreneurs to Employers Research shows that women entrepreneurs are over-represented in micro-enterprise and under-represented in growth-oriented enterprise. Many women remain self-employed or run very small businesses rather than expand their businesses sufficiently to hire employees. Count Me In for Women’s Economic Independence, a leading U.S.-based not-for-profit provider of resources, business education and community support for women entrepreneurs seeking to grow micro businesses to million dollar enterprises, noted that while 50 percent of privately-owned companies or start-ups are run by women, only 17 percent of women-owned businesses in the United States have an employee. Over 70 percent of women-owned businesses are at U.S. $50,000 or less. Only four women led businesses are in the Fortune 500. Women’s under-representation as employers is a global phenomenon. While types of employment vary depending on a country’s GDP, the likelihood that women will become employers remains consistently low across countries. Globally, women are more likely to run informal or small firms. Women are represented in the labor force; the challenge lies in supporting them to move into higher-value and more formalized types of labor, either as wage-earners with access to social benefits, or as growth-entrepreneurs. 57
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STATE OF THE FIELD IN YOUTH ECONOMIC OPPORTUNITIES

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