| Abstract : |
The issue of access to finance for ethnic minority entrepreneurs has been a subject of considerable research over the last two decades in the UK. However, to date no research has been carried out that examines access to start-up finance for ethnic minority graduate entrepreneurs (EMGEs). The evidence from the resulting report presents some surprising and, in some respects, counter-intuitive findings in relation to this topic. It is the first time such an exercise has been carried out amongst ethnic minority graduates and is, therefore, a highly novel piece of research.
EMGEs are distinct from general graduate and non-graduate start-ups in a number of ways. In comparison with non-graduate ethnic start-ups, EMGEs appear not to encounter finance constraints and are able to provide sufficient collateral. There is excessive reliance on personal savings and family finance, at the start-up and long after the start-up stage, that has implications for the optimal capital structure. EMGEs that start up businesses, are, on average, larger than non-graduate enterprises and have the potential to reduce economic inactivity amongst the ethnic minority population. Ethnic minorities are heterogeneous; their experiences in accessing finance vary. Taking the heterogeneity into account, we report that in contrast to general graduate start-ups, EMGEs are distinct in that evidence suggests ethnic minority graduates have a high level of unemployment, take a longer period of time to enter employment and there is a higher level of dissatisfaction with career progression. EMGEs have much less external finance in their capital structure compared with general graduate start-ups. It raises the question whether the right financial advice is taken and whether this behaviour constrains EMGEs' expansion, which may have a negative impact on the economy. |
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