Nowadays, it seems that many people realize suddenly that they have a so far unknown entrepreneurial side and decide to start a new company. On the one side, this is undoubtedly positive. The attempts to put into practice new ideas can be a very powerful driver for the developments of new products and services for the consumers, for the innovation, and for the creation of new jobs. Succinctly, for overall economic growth.
On the other side, I am afraid that a significant part of this phenomenon is not driven by true and genuine entrepreneurial spirits. I think that there are two factors that push it and they are not necessarily good.
The first one is desperation. Because of the financial and economic crisis, many people lost their jobs and as they were not able to find new ones, they decided to become self-employed. In many cases, people started a new company operating in a market segment they knew nothing about. A significant percentage of such businesses fail within the first year. Of course, there is no school that teaches you how to become an entrepreneur. However, I think that everybody should learn the basics of running a business before starting one. Today’s economic situation is pretty complex and I believe that nobody should rely on the goodwill and the “learn-by-doing” approach only, to understand how to successfully set up a business.
The second factor is the amount of money that is readily available in the credit market. Part of this is directed at the start-ups. Specialized venture capital funds and fund-rasing platforms have been created to support this kind of companies. These organizations are supposed to accurately select the start-ups to finance, by performing a thorough assessment of their founding team, their business plans, their market potential, etc. Nevertheless, it seems that some of these organizations are not so rigorous and, even if they are professional investors, some cool and hi-tech sounding words in the business plan— such as Internet of Things, artificial intelligence, smart factory, etc.—are enough to “fool” them.
At the end of the day, the birth of such companies can be harmful to many economic actors: the founders themselves—who, in many cases, invest all of their savings—, the investors, and even the existing companies that may be negatively affected by “makeshift” competitors that will soon disappear.