Many initiate economic activities in different countries every year. While many have the money to start an economic initiative, many others initiate economic activities with financial support from other sources including loans and donations in many countries. But many cannot start economic activities driven by the lack of money and access to money. Despite increased efforts of governments to provide more opportunities for startup initiatives — startup businesses that are primarily driven by the desire to generate profit and create a sustainable business initiative and other startup initiatives including those that focus on creating innovative solutions to address social and other challenges — they are scant in many countries, leading to a concern for those who initiate or want to initiate economic activities.
It is notable that startups have economic, social and other impacts. From an economic viewpoint, startups contribute to job creation, innovation and economic growth. It is often difficult for countries including developed countries to provide jobs to all citizens who need them. Many are unemployed at present. According to available sources, the world unemployment rate was 5.77 percent in 2022. Startups are a crucial solution to unemployment in developed, developing and less developed countries. By introducing new products, services and business models, startups also drive competition and encourage existing industries to adapt and improve. Among others, startups have the potential to address social, cultural and other challenges by developing solutions, fostering innovation and entrepreneurship and encouraging individuals to pursue their ideas and create new solutions to existing problems.
But there are diverse loan based and other monetary barriers to startup initiatives that make it difficult for entrepreneurs to secure the necessary capital to launch their initiatives. High interest rates on loans and limited access to funding from traditional financial institutions are crucial barriers. Additionally, strict lending criteria and requirements imposed by banks may further limit the ability of startups to obtain financial support, as they often lack the collateral and/or established track record that traditional lenders typically look for. Limited resources and financial instability also put barriers to many startups. Among others, limited donation opportunities for startups, the mission or purpose of organizations that donate or grant to startups and complex processes can also pose challenges for startups seeking grants and/or donations.
There are definitely country-wise differences in the promotion of startup initiatives. According to multiple sources, there are well-established ecosystems that provide extensive funding opportunities — loans, grants and donations — for startups, along with tax incentives, in different developed countries including the United States, Canada and Israel. Emerging economies including, but not limited to, India and Brazil are rapidly increasing their support by implementing startup-friendly policies and more funding opportunities. But there is inadequate access to capital and limited resources for startup initiatives in many developing and less developed nations. Consequently, funding opportunities for startups are less in many countries including those which often rely on international organizations and foreign investors to bridge the funding gap, though governments have increased their emphasis on promoting startups.
It is desired that startup initiatives be encouraged across the world. For this, barriers to startup funding need to be removed and more funding opportunities need to be created. Making and implementing startup-friendly policies, government-backed loan programs and tax incentives targeting startup initiatives or early-stage startups can greatly improve monetary access. But government startup programs need to offer low-interest loans with an aim to help startups overcome financial barriers and kickstart their growth. Additionally, establishing partnerships between established financial institutions and startup incubators or accelerators, organizations that provide support and resources to early-stage startups, may help provide venture capital funding or lines of credit that are more accessible. Fostering collaboration between established businesses and startups can also help address funding barriers.
But less developed and developing countries need to place more emphasis on providing funding opportunities for startups. Along with the government, increased steps of non-government organizations and others may be helpful. Among startups, grants and donations are increasingly crucial for social impact startups which are typically focused on creating innovative solutions to social or other problems. Cross-country grants and donations to social impact startups may also be imperative Bur criteria for grants for startups definitely need to be relaxed. Among other steps, removing unnecessary bureaucratic and other barriers to new ventures may also be helpful in many countries in fostering startups.
