Description
Brief outline in relation to the ey g20 entrepreneurship barometer 2013.
Country profles
Argentina
Australia
Brazil
Canada
China
France
Germany
India
Indonesia
Italy
Japan
Mexico
• Russia
Saudi Arabia
South Africa
South Korea
Turkey
United Kingdom
United States
European Union
The power of three
Together, governments, entrepreneurs and
corporations can spur growth across the G20
The EY G20 Entrepreneurship Barometer 2013
Russia at a glance
Russia has made substantial progress in its efforts to foster entrepreneurship — especially
considering that the country only opened up as a market economy in the 1990s. Russia
performs well in comparison to other rapid-growth markets in EY G20 Entrepreneurship
Barometer 2013, which underlines its solid overall performance in developing an ecosystem
more conducive to entrepreneurs in recent years. For those starting a new venture, there is
certainly plenty of opportunity: a growing consumer market, rising disposable income, vast
resource reserves and a highly skilled workforce.
Russia’s impressive performance in improving the coordinated
support it offers entrepreneurs is notable, and it highlights the
strongly positive sentiment on the ground in this respect. Business
incubators, dedicated industrial parks, and other forms of support
are all on the rise, ensuring the country secured frst position on
this pillar of its entrepreneurial ecosystem.
Of course, entrepreneurs still face challenges. Topping the list is
the fact that diffculties remain in accessing fnance. Thirty-fve
percent of local entrepreneurs consider it very, or somewhat,
easy to access funding, compared to 59% who think it diffcult.
This is hardly unique to Russia; however, 70% of entrepreneurs
report diffculties in accessing funding across the G20. Beyond
fnance, Russia’s regulatory burden is often cited as an obstacle by
local entrepreneurs, although the country actually scores above
average here, and improvements are being made.
Dwelling on the diffculties, however, misses an important
element of the picture: improvements in the entrepreneurial
environment and markedly positive sentiment among locals.
Only entrepreneurs from Indonesia were more positive about the
recent improvements in the conditions faced by entrepreneurs. In
particular, Russian entrepreneurs were the most likely to report
improved access to business incubators, entrepreneurial networks
and mentorship programs. They also noted marked improvements
in the problem areas of education and access to funding.
If sustained, these improvements should provide a welcome
boost to levels of entrepreneurial activity in Russia. This will be
important, not least in countering a drop in the number of new
business incorporations, which fell sharply in 2011, for example.
1
Greater efforts will be needed to help turn this around.
Alexander Ivlev
Country Managing Partner,
Russia, EY
Dmitry Neverko
Strategic Growth Markets
Leader, Commonwealth of
Independent States, EY
Russia’s entrepreneurs are positive about the future
Key facts
Overall Barometer ranking Quartile 3
Population 143,553 million
GNI per capita (PPP) US$22,760
GDP growth 3.4%
Exports as % GDP 31.1%
Source: The World Bank, 2012
1
“New business registered (number),” World Bank website, data.worldbank.org,
accessed 19 June 2013.
2 | The power of three The power of three | 3
Weaknesses
• With the exception of M&A, access to funding is among
the most limited in the G20, particularly for initial public
offerings (IPOs) and venture capital (VC).
• To build a knowledge-based economy, Russia needs to
integrate more business elements into its education
system.
• The demographic situation in Russia, particularly at the
level of Generation Y / Millennials, which coincided with
the steep post-Soviet drop in birth rates is contributing to
an increasingly tight labor market.
Opportunities
• Russia’s large, expanding consumer market continues
to be its most attractive feature, as noted by 70% of
respondents from Russia.
• Plenty of scope for improvement, given the low base that
Russia is starting from.
• Created in 2011, the Agency for Strategic Initiatives
(ASI) has the ability to push through signifcant business-
friendly reforms.
2
Threats
• Doing business in Russia remains fraught with political,
legislative and administrative issues, including corruption
and defciencies in the rule of law.
3
• The country’s over-reliance on oil exports raises questions
about the sustainability of its economic model.
4
Strengths
• Russian entrepreneurs reported great improvements
in the availability of business incubators, networks and
mentorship.
• The country has high levels of mergers and acquisitions
(M&A) funding relative to other G20 rapid-growth
economies.
• For tax and regulatory matters, Russia scores highest of
all BRIC (Brazil, Russia, India and China) economies. It also
scores higher than the EU and US.
SWOT analysis
A growing need for fnance
Russian entrepreneurs would beneft greatly from increased
efforts to ensure the availability of the fnancing they require.
Russia punches below its weight in this crucial area for
entrepreneurship, making it more diffcult for new businesses
to get off the ground and for existing businesses to expand.
The Government’s ambitious plans to expand the number of
entrepreneurial businesses should help to focus minds in this
and other areas.
Make your voice heard
Join the debate
Tweet #G20ey
ey.com/G20ey
Russia’s pillar scores compared to rapid-growth G20 economies average
Access to funding equal weight score
A
r
g
e
n
t
i
n
a
U
S
U
K
R
u
s
s
i
a
F
r
a
n
c
e
T
u
r
k
e
y
M
e
x
i
c
o
I
t
a
l
y
C
h
i
n
a
C
a
n
a
d
a
A
u
s
t
r
a
l
i
a
S
o
u
t
h
A
f
r
i
c
a
J
a
p
a
n
S
o
u
t
h
K
o
r
e
a
B
r
a
z
i
l
I
n
d
o
n
e
s
i
a
I
n
d
i
a
E
U
S
a
u
d
i
A
r
a
b
i
a
G
e
r
m
a
n
y
0
1
2
3
4
5
6
7
8
Top areas where govt can accelerate access to funding in headquarter country
G20 average
5.5
Time spent on tax issues
S
a
u
d
i
A
r
a
b
i
a
B
r
a
z
i
l
A
r
g
e
n
t
i
n
a
U
S
F
r
a
n
c
e
C
a
n
a
d
a
U
K
A
u
s
t
r
a
l
i
a
M
e
x
i
c
o
C
h
i
n
a
J
a
p
a
n
I
t
a
l
y
I
n
d
o
n
e
s
i
a
R
u
s
s
i
a
I
n
d
i
a
S
o
u
t
h
K
o
r
e
a
T
u
r
k
e
y
G
e
r
m
a
n
y
E
U
S
o
u
t
h
A
f
r
i
c
a
0
500
1000
1500
2000
2500
3000
G20 average
347
*annotate as 2010-2012 average
h
o
u
r
s
Number of start-up procedures
C
a
n
a
d
a
A
r
g
e
n
t
i
n
a
C
h
i
n
a
I
t
a
l
y
E
U
S
o
u
t
h
A
f
r
i
c
a
F
r
a
n
c
e
A
u
s
t
r
a
l
i
a
B
r
a
z
i
l
I
n
d
i
a
I
n
d
o
n
e
s
i
a
S
a
u
d
i
A
r
a
b
i
a
G
e
r
m
a
n
y
R
u
s
s
i
a
J
a
p
a
n
U
S
U
K
T
u
r
k
e
y
S
o
u
t
h
K
o
r
e
a
M
e
x
i
c
o
0
2
4
6
8
10
12
14
16
G20 average
7.6
Tax incentives for investment in small business
Investment in infrastructure
Procurement (when government has to use small
entrepreneurs for a certain percentage of their tenders)
Simpli?ed, more ef?cient business regulatory systems
Promotion of a business environment that is not
overly litigated
High impact regulation & tax initiatives for the next three years
Simpli?cation of tax rules and regulations
Decrease in corporate income tax burden
on small businesses
Decrease in indirect tax rates such as payroll,
property taxes, etc.
Ease of doing business with the tax authority
Initiatives to improve long-term growth in entrepreneurship
Government start-up/other programs
Business incubators
Entrepreneur clubs and associations
Venture capital associations
Educators
Does culture encourage entrepreneurship?
Recent developments in formal and informal education
Entrepreneurship conferences
and seminars
Informal networks
Government programs
supporting entrepreneurship
43%
71%
70%
68%
64%
35%
30%
29%
21%
79%
54%
49%
45%
35%
32%
31%
30%
Partly agree, 33%
Neither agree nor disagree, 12%
Fully agree, 13%
Fully disagree, 18%
Partly disagree, 24%
0
1
2
3
4
5
6
7
Equal weight scores
Russia
Rapid-growth economies G20 average
E
d
u
c
a
t
i
o
n
a
n
d
t
r
a
i
n
i
n
g
T
a
x
a
n
d
r
e
g
u
la
t
io
n
E
n
t
r
e
p
r
e
n
e
u
r
s
h
i
p
c
u
l
t
u
r
e
A
c
c
e
s
s
t
o
f
u
n
d
i
n
g
C
o
o
r
d
i
n
a
t
e
d
s
u
p
p
o
r
t
Source: EY G20 Entrepreneurship Barometer 2013
2
“Agency to support medium-sized businesses starts work in Russia,” The Voice of
Russia website, voiceofrussia.com, accessed 22 June 2013.
3
“Russia’s growth stifed by corruption,” BBC News website, bbc.co.uk/news, accessed
29 June 2013.
4
“Economy: Oil dependency remains a fundamental weakness,” Financial Times website,
ft.com, accessed 2 July 2013.
2 | The power of three The power of three | 3
What to watch for
Bureaucratic barriers start to fall
In the EY G20 Entrepreneurship Barometer 2013, Russia ranks
above average, including ahead of all other BRIC economies in
the tax and regulation pillar, contrary to popular perception. This
refects important changes in the focus of the Government’s
policy. Offcials have been actively searching for ways to improve
the business environment for entrepreneurs, as part of their drive
to double the contribution of entrepreneurial businesses to GDP
so that they account for roughly 50% by 2020.
5
Overseeing this work has been the ASI, which was created in
2011 to improve conditions for entrepreneurs and facilitate
dialogue between business and government. The ASI’s goal is to
move Russia to 20th position in The World Bank’s Ease of Doing
Business Index by 2018 (from 112th in 2012).
6
To achieve this,
it has worked with businesses to identify 22 critical areas for
improvement, ranging from increasing competition to reforming
customs regulation.
Given the political will, it is not surprising that some positive
change is already apparent. For example, the number of
procedures involved in starting a business fell from nine in 2011
to eight in 2012. And the time it takes to start a business fell from
29 days to 18 during the same period, while the cost of doing so
dropped from 2.6% of average income in 2010 to 2.0% in 2012.
The average time entrepreneurs spend annually on their tax
affairs has decreased from 290 to 177 hours, freeing up around
three weeks for more productive activity. Indeed, in The World
Bank Doing Business Index report, Russia moved up 41 positions
in Tax Administration, since 2011. This is the best improvement of
any G20 country. Each of these areas of progress helps make life a
little easier for Russia’s entrepreneurs.
Time spent on tax issues
Access to funding equal weight score
A
r
g
e
n
t
i
n
a
U
S
U
K
R
u
s
s
i
a
F
r
a
n
c
e
T
u
r
k
e
y
M
e
x
i
c
o
I
t
a
l
y
C
h
i
n
a
C
a
n
a
d
a
A
u
s
t
r
a
l
i
a
S
o
u
t
h
A
f
r
i
c
a
J
a
p
a
n
S
o
u
t
h
K
o
r
e
a
B
r
a
z
i
l
I
n
d
o
n
e
s
i
a
I
n
d
i
a
E
U
S
a
u
d
i
A
r
a
b
i
a
G
e
r
m
a
n
y
0
1
2
3
4
5
6
7
8
Top areas where govt can accelerate access to funding in headquarter country
G20 average
5.5
Time spent on tax issues
S
a
u
d
i
A
r
a
b
i
a
B
r
a
z
i
l
A
r
g
e
n
t
i
n
a
U
S
F
r
a
n
c
e
C
a
n
a
d
a
U
K
A
u
s
t
r
a
l
i
a
M
e
x
i
c
o
C
h
i
n
a
J
a
p
a
n
I
t
a
l
y
I
n
d
o
n
e
s
i
a
R
u
s
s
i
a
I
n
d
i
a
S
o
u
t
h
K
o
r
e
a
T
u
r
k
e
y
G
e
r
m
a
n
y
E
U
S
o
u
t
h
A
f
r
i
c
a
0
500
1000
1500
2000
2500
3000
G20 average
347
*annotate as 2010-2012 average
h
o
u
r
s
Number of start-up procedures
C
a
n
a
d
a
A
r
g
e
n
t
i
n
a
C
h
i
n
a
I
t
a
l
y
E
U
S
o
u
t
h
A
f
r
i
c
a
F
r
a
n
c
e
A
u
s
t
r
a
l
i
a
B
r
a
z
i
l
I
n
d
i
a
I
n
d
o
n
e
s
i
a
S
a
u
d
i
A
r
a
b
i
a
G
e
r
m
a
n
y
R
u
s
s
i
a
J
a
p
a
n
U
S
U
K
T
u
r
k
e
y
S
o
u
t
h
K
o
r
e
a
M
e
x
i
c
o
0
2
4
6
8
10
12
14
16
G20 average
7.6
Tax incentives for investment in small business
Investment in infrastructure
Procurement (when government has to use small
entrepreneurs for a certain percentage of their tenders)
Simpli?ed, more ef?cient business regulatory systems
Promotion of a business environment that is not
overly litigated
High impact regulation & tax initiatives for the next three years
Simpli?cation of tax rules and regulations
Decrease in corporate income tax burden
on small businesses
Decrease in indirect tax rates such as payroll,
property taxes, etc.
Ease of doing business with the tax authority
Initiatives to improve long-term growth in entrepreneurship
Government start-up/other programs
Business incubators
Entrepreneur clubs and associations
Venture capital associations
Educators
Does culture encourage entrepreneurship?
Recent developments in formal and informal education
Entrepreneurship conferences
and seminars
Informal networks
Government programs
supporting entrepreneurship
43%
71%
70%
68%
64%
35%
30%
29%
21%
79%
54%
49%
45%
35%
32%
31%
30%
Partly agree, 33%
Neither agree nor disagree, 12%
Fully agree, 13%
Fully disagree, 18%
Partly disagree, 24%
0
1
2
3
4
5
6
7
Equal weight scores
Russia
Rapid-growth economies G20 average
E
d
u
c
a
t
io
n
a
n
d
t
r
a
in
in
g
T
a
x
a
n
d
r
e
g
u
la
t
io
n
E
n
t
r
e
p
r
e
n
e
u
r
s
h
ip
c
u
lt
u
r
e
A
c
c
e
s
s
t
o
f
u
n
d
in
g
C
o
o
r
d
in
a
t
e
d
s
u
p
p
o
r
t
Source: The World Bank, 2010–12 average
Number of start-up procedures
Access to funding equal weight score
A
r
g
e
n
t
i
n
a
U
S
U
K
R
u
s
s
i
a
F
r
a
n
c
e
T
u
r
k
e
y
M
e
x
i
c
o
I
t
a
l
y
C
h
i
n
a
C
a
n
a
d
a
A
u
s
t
r
a
l
i
a
S
o
u
t
h
A
f
r
i
c
a
J
a
p
a
n
S
o
u
t
h
K
o
r
e
a
B
r
a
z
i
l
I
n
d
o
n
e
s
i
a
I
n
d
i
a
E
U
S
a
u
d
i
A
r
a
b
i
a
G
e
r
m
a
n
y
0
1
2
3
4
5
6
7
8
Top areas where govt can accelerate access to funding in headquarter country
G20 average
5.5
Time spent on tax issues
S
a
u
d
i
A
r
a
b
i
a
B
r
a
z
i
l
A
r
g
e
n
t
i
n
a
U
S
F
r
a
n
c
e
C
a
n
a
d
a
U
K
A
u
s
t
r
a
l
i
a
M
e
x
i
c
o
C
h
i
n
a
J
a
p
a
n
I
t
a
l
y
I
n
d
o
n
e
s
i
a
R
u
s
s
i
a
I
n
d
i
a
S
o
u
t
h
K
o
r
e
a
T
u
r
k
e
y
G
e
r
m
a
n
y
E
U
S
o
u
t
h
A
f
r
i
c
a
0
500
1000
1500
2000
2500
3000
G20 average
347
*annotate as 2010-2012 average
h
o
u
r
s
Number of start-up procedures
C
a
n
a
d
a
A
r
g
e
n
t
i
n
a
C
h
i
n
a
I
t
a
l
y
E
U
S
o
u
t
h
A
f
r
i
c
a
F
r
a
n
c
e
A
u
s
t
r
a
l
i
a
B
r
a
z
i
l
I
n
d
i
a
I
n
d
o
n
e
s
i
a
S
a
u
d
i
A
r
a
b
i
a
G
e
r
m
a
n
y
R
u
s
s
i
a
J
a
p
a
n
U
S
U
K
T
u
r
k
e
y
S
o
u
t
h
K
o
r
e
a
M
e
x
i
c
o
0
2
4
6
8
10
12
14
16
G20 average
7.6
Tax incentives for investment in small business
Investment in infrastructure
Procurement (when government has to use small
entrepreneurs for a certain percentage of their tenders)
Simpli?ed, more ef?cient business regulatory systems
Promotion of a business environment that is not
overly litigated
High impact regulation & tax initiatives for the next three years
Simpli?cation of tax rules and regulations
Decrease in corporate income tax burden
on small businesses
Decrease in indirect tax rates such as payroll,
property taxes, etc.
Ease of doing business with the tax authority
Initiatives to improve long-term growth in entrepreneurship
Government start-up/other programs
Business incubators
Entrepreneur clubs and associations
Venture capital associations
Educators
Does culture encourage entrepreneurship?
Recent developments in formal and informal education
Entrepreneurship conferences
and seminars
Informal networks
Government programs
supporting entrepreneurship
43%
71%
70%
68%
64%
35%
30%
29%
21%
79%
54%
49%
45%
35%
32%
31%
30%
Partly agree, 33%
Neither agree nor disagree, 12%
Fully agree, 13%
Fully disagree, 18%
Partly disagree, 24%
0
1
2
3
4
5
6
7
Equal weight scores
Russia
Rapid-growth economies G20 average
E
d
u
c
a
t
io
n
a
n
d
t
r
a
in
in
g
T
a
x
a
n
d
r
e
g
u
la
t
io
n
E
n
t
r
e
p
r
e
n
e
u
r
s
h
ip
c
u
lt
u
r
e
A
c
c
e
s
s
t
o
f
u
n
d
in
g
C
o
o
r
d
in
a
t
e
d
s
u
p
p
o
r
t
Source: The World Bank, 2010–12 average
double
the entrepreneurial
businesses’ contribution
to GDP by 2020
The Government plans to
5
“Russia: SME funding — Building a New Russia,” Syminvest website, syminvest.com,
accessed 4 June 2013.
6
“Russian government offcial: Russia should rise to 20th place in annual Doing Business
Rating,” ITAR-TASS News Agency website, itar-tass.com, accessed 27 July 2013.
4 | The power of three The power of three | 5
An ombudsman for
entrepreneurs
The Government has appointed
an ombudsman to safeguard
entrepreneurs’ rights. It will
act to defend business rights
in court, suspend agency-level
regulations upon court order and
ask the court to suspend offcials’
actions as an interim measure
where appropriate. All of this will
bolster the legal support for those
embarking on new ventures.
Launch date: 2012
Most relevant pillars: coordinated
support, tax and regulation
Rusnano — The Russian
Government’s venture
capital frm
Rusnano invests in niche
companies operating in the
nanotechnology domain.
It is committed to projects
in industries with high
technological potential, such as
microelectronics, biotechnology,
energy, aviation and rocket-space
complex. So far, it has invested
US$6.3b in more than 100 frms
within and outside Russia.
Launch date: 2007
Most relevant pillar: access to
funding
One-stop shop system for
new projects
The Ministry of Investment Policy
(MIP) or Investment Development
Agencies (IDA) act as a one-stop
organizational support system
for entrepreneurs and investors
in every region of Russia. These
bodies have signifcantly reduced
the time and effort spent by
prospective entrepreneurs on
obtaining licenses, permissions
and approvals. For example,
to obtain land or premises,
an entrepreneur can now
communicate only with the MIPs
or IDAs, instead of two dozen
separate Government agencies,
as before.
Launch date: 2005
Most relevant pillar: tax and
regulation
How the government is helping
Key insight: bridging the funding gap
Kirill Varlamov, General Director, Naumen, Russia
Kirill Varlamov is general director of Naumen, Russia’s leading
provider of call-center software solutions. He is also the head
of Internet Initiatives Development Fund.
When looking at the hard data, the availability of fnance for
entrepreneurs remains relatively low, but this masks some more
positive perceptions on the ground, explains Kirill Varlamov, the
general director of Naumen, a software company and the head
of newly formed Internet Initiatives Development Fund (FRII).
“There has been a huge development with a lot more institutes
and funds now supporting small and growing businesses. There
are many programs you can take part in and get money from.”
Much of this comes off the back of strong Government efforts,
seeking to ensure funding for entrepreneurs at varying stages
of growth, from start-ups to fast-growth businesses. “These
funding programs have worked quite well. Some of these funds
provide grants for educational and development purposes,
allowing entrepreneurs to use this to try and create a frst
product concept, before moving further,” explains Varlamov.
“In general, seed funding has been less available, but the
Government has just announced its support of a US$200
million fund to invest in internet start-ups (FRII). This fund
will pay a lot of attention to businesses at the very earliest
stages of development. Its purpose is not only to provide them
with money, but also to build all the necessary infrastructure
elements for the successful development of internet industry
in Russia.”
The next challenge, as he sees it, lies in bolstering the business
education system, to ensure a stronger supply of qualifed
staff. “Education is probably the weakest area of the Russian
entrepreneurship ecosystem. We need more programs and
higher quality. In particular, we badly need world-class training
at MBA level,” explains Varmalov.
4 | The power of three The power of three | 5
Access to funding
Pillar ranking: 15
The biggest challenge for Russia’s entrepreneurs
The weakest aspect of Russia’s overall entrepreneurial ecosystem
is its performance on access to funding. Overall, 59% of local
entrepreneurs say it is either somewhat or very diffcult to
gain access to funding. In particular, domestic credit to the
private sector is below the G20 average, although the Russian
SME Resource Centre (RCSME) recently reported that the
entrepreneurial business share of new business lending had
increased from 16% in 2009 to 20% in 2012, highlighting an
encouraging improvement.
Overall, the country’s performance on differing sources of
funding varies. For example, the total value of mergers and
acquisitions (M&A) deals is among the highest in the G20 at 5.0%
(as a proportion of GDP), well above the average of 3.0%, while
on venture capital (VC) Russia scores below the rapid-growth
countries average for ease of securing funding. However, the pace
of VC growth has accelerated in recent years, nearly doubling to
US$1b in 2012, from US$500m in 2011, according to a report by
RVC and the Ministry of Economic Development.
7
In 2012 the Moscow Exchange’s Innovation and Investment
Market launched IPOboard, an online information and trading
system that helps innovative companies to raise M&A and venture
capital. The project has been developed in close cooperation with
the Russian Venture Company, Rusnano and other Russian state
institutions that endorse innovation. This will help, given that
Russia performs weakly on the level of investment raised through
IPOs. As a proportion of GDP, Russian IPOs raise 20 times less
than the G20 average.
In the survey, respondents from Russia identifed tax incentives
for investors as the most signifcant measure the Government
could introduce to boost access to funding. Added to this,
Naumen’s Varlamov argues that interests rates could be lower,
to help reduce the cost of commercial loans and support
entrepreneurs.
Access to funding Russia G20 average Period
IPO market activity
IPO amount invested
(% of GDP)
0.01 0.22 2009-11
average
Access to credit
Domestic credit to private
sector (% of GDP)
44.5 99.0 2008-10
average
Venture capital availability
(Scale of 1=impossible to
7=very easy)
2.3 3.0 2009-11
average
M&A deal value
(% of GDP)
5.0 3.4 2010-12
average
Sources: The World Bank, Dealogic, IMF, World Economic Forum
59%
of local entrepreneurs
surveyed say that it is
diffcult to access funding
in Russia
Access to funding equal weight score
A
r
g
e
n
t
i
n
a
U
S
U
K
R
u
s
s
i
a
F
r
a
n
c
e
T
u
r
k
e
y
M
e
x
i
c
o
I
t
a
l
y
C
h
i
n
a
C
a
n
a
d
a
A
u
s
t
r
a
l
i
a
S
o
u
t
h
A
f
r
i
c
a
J
a
p
a
n
S
o
u
t
h
K
o
r
e
a
B
r
a
z
i
l
I
n
d
o
n
e
s
i
a
I
n
d
i
a
E
U
S
a
u
d
i
A
r
a
b
i
a
G
e
r
m
a
n
y
0
1
2
3
4
5
6
7
8
Top areas where govt can accelerate access to funding in headquarter country
G20 average
5.5
Time spent on tax issues
S
a
u
d
i
A
r
a
b
i
a
B
r
a
z
i
l
A
r
g
e
n
t
i
n
a
U
S
F
r
a
n
c
e
C
a
n
a
d
a
U
K
A
u
s
t
r
a
l
i
a
M
e
x
i
c
o
C
h
i
n
a
J
a
p
a
n
I
t
a
l
y
I
n
d
o
n
e
s
i
a
R
u
s
s
i
a
I
n
d
i
a
S
o
u
t
h
K
o
r
e
a
T
u
r
k
e
y
G
e
r
m
a
n
y
E
U
S
o
u
t
h
A
f
r
i
c
a
0
500
1000
1500
2000
2500
3000
G20 average
347
*annotate as 2010-2012 average
h
o
u
r
s
Number of start-up procedures
C
a
n
a
d
a
A
r
g
e
n
t
i
n
a
C
h
i
n
a
I
t
a
l
y
E
U
S
o
u
t
h
A
f
r
i
c
a
F
r
a
n
c
e
A
u
s
t
r
a
l
i
a
B
r
a
z
i
l
I
n
d
i
a
I
n
d
o
n
e
s
i
a
S
a
u
d
i
A
r
a
b
i
a
G
e
r
m
a
n
y
R
u
s
s
i
a
J
a
p
a
n
U
S
U
K
T
u
r
k
e
y
S
o
u
t
h
K
o
r
e
a
M
e
x
i
c
o
0
2
4
6
8
10
12
14
16
G20 average
7.6
Tax incentives for investment in small business
Investment in infrastructure
Procurement (when government has to use small
entrepreneurs for a certain percentage of their tenders)
Simpli?ed, more ef?cient business regulatory systems
Promotion of a business environment that is not
overly litigated
High impact regulation & tax initiatives for the next three years
Simpli?cation of tax rules and regulations
Decrease in corporate income tax burden
on small businesses
Decrease in indirect tax rates such as payroll,
property taxes, etc.
Ease of doing business with the tax authority
Initiatives to improve long-term growth in entrepreneurship
Government start-up/other programs
Business incubators
Entrepreneur clubs and associations
Venture capital associations
Educators
Does culture encourage entrepreneurship?
Recent developments in formal and informal education
Entrepreneurship conferences
and seminars
Informal networks
Government programs
supporting entrepreneurship
43%
71%
70%
68%
64%
35%
30%
29%
21%
79%
54%
49%
45%
35%
32%
31%
30%
Partly agree, 33%
Neither agree nor disagree, 12%
Fully agree, 13%
Fully disagree, 18%
Partly disagree, 24%
0
1
2
3
4
5
6
7
Equal weight scores
Russia
Rapid-growth economies G20 average
E
d
u
c
a
t
i
o
n
a
n
d
t
r
a
i
n
i
n
g
T
a
x
a
n
d
r
e
g
u
la
t
io
n
E
n
t
r
e
p
r
e
n
e
u
r
s
h
i
p
c
u
l
t
u
r
e
A
c
c
e
s
s
t
o
f
u
n
d
i
n
g
C
o
o
r
d
i
n
a
t
e
d
s
u
p
p
o
r
t
Top fve areas where Government can accelerate access to funding
Source: EY G20 Entrepreneurship Barometer 2013
Domestic credit to the private
sector at 44.5% of Russian
GDP was less than half the
G20 average of 99.0%
(2009–11 average)
7
“RVC and Ministry of Economic Development released report on implementation
innovative development strategy,” RVC website, rusventure.ru, accessed 29 June 2013.
6 | The power of three The power of three | 7
Entrepreneurship culture
Pillar ranking: 10
Russia’s entrepreneurs need to assume
a bigger role in driving innovation
Less than 30 years after Russia established a market economy,
efforts to boost enterprise are held back by an entrepreneurship
culture by the fact entrepreneurship is yet to be fully embedded
in Russian culture. Fewer than half of local respondents agreed
that their culture is supportive of entrepreneurship or that it is
encouraged as a career choice.
Still, it was striking how optimistic Russia’s entrepreneurs are in
their responses to the questions about trends over the last three
years. Their sense that things are improving may partly refect the
low base from which the country is starting, but it also points to a
degree of engagement and enthusiasm among entrepreneurs that
will be important if entrepreneurship is to take root more frmly in
the country.
A growing number of entrepreneur role models would also help
here, by encouraging young people to consider the potential for
starting their own ventures. Elena Masolova, a serial entrepreneur
and founder of Darberry (a coupon service later bought by
Groupon), Pixonic and investment fund AddVenture, explains how
she was inspired by reading about icons such as Richard Branson
and Steve Jobs. “These examples also allow you to learn about
successful business models that work in other countries. But we
need more homegrown high-profle Russian success stories,”
she says.
In terms of its innovation culture, Russia has a pressing need
for new, scalable businesses built on research and development
(R&D). The country spends around 1.1% of its GDP on R&D and
has a strong reputation in some sectors, including aerospace
and nuclear power. But this doesn’t trickle down effectively
to entrepreneurs right now: most Russian R&D is carried out
in public institutes that have weak commercial linkages, while
most business R&D is concentrated in larger frms.
8
Only a small
number of entrepreneurial high-tech businesses are active in
R&D. Greater emphasis could be given to encourage clearer
links between universities and entrepreneurs, in order to foster
increased commercialization of R&D efforts.
Entrepreneurship
culture
Russia G20 average Period
R&D spending (% of GDP) 1.1 1.6 2007-09
average
Scientifc and technical
journal articles (per
10,000 people)
1.0 3.3 2007-09
average
Cost of resolving
insolvency (% of estate)
9.0 11.8 2010-12
average
Source: The World Bank
Access to funding equal weight score
A
r
g
e
n
t
i
n
a
U
S
U
K
R
u
s
s
i
a
F
r
a
n
c
e
T
u
r
k
e
y
M
e
x
i
c
o
I
t
a
l
y
C
h
i
n
a
C
a
n
a
d
a
A
u
s
t
r
a
l
i
a
S
o
u
t
h
A
f
r
i
c
a
J
a
p
a
n
S
o
u
t
h
K
o
r
e
a
B
r
a
z
i
l
I
n
d
o
n
e
s
i
a
I
n
d
i
a
E
U
S
a
u
d
i
A
r
a
b
i
a
G
e
r
m
a
n
y
0
1
2
3
4
5
6
7
8
Top areas where govt can accelerate access to funding in headquarter country
G20 average
5.5
Time spent on tax issues
S
a
u
d
i
A
r
a
b
i
a
B
r
a
z
i
l
A
r
g
e
n
t
i
n
a
U
S
F
r
a
n
c
e
C
a
n
a
d
a
U
K
A
u
s
t
r
a
l
i
a
M
e
x
i
c
o
C
h
i
n
a
J
a
p
a
n
I
t
a
l
y
I
n
d
o
n
e
s
i
a
R
u
s
s
i
a
I
n
d
i
a
S
o
u
t
h
K
o
r
e
a
T
u
r
k
e
y
G
e
r
m
a
n
y
E
U
S
o
u
t
h
A
f
r
i
c
a
0
500
1000
1500
2000
2500
3000
G20 average
347
*annotate as 2010-2012 average
h
o
u
r
s
Number of start-up procedures
C
a
n
a
d
a
A
r
g
e
n
t
i
n
a
C
h
i
n
a
I
t
a
l
y
E
U
S
o
u
t
h
A
f
r
i
c
a
F
r
a
n
c
e
A
u
s
t
r
a
l
i
a
B
r
a
z
i
l
I
n
d
i
a
I
n
d
o
n
e
s
i
a
S
a
u
d
i
A
r
a
b
i
a
G
e
r
m
a
n
y
R
u
s
s
i
a
J
a
p
a
n
U
S
U
K
T
u
r
k
e
y
S
o
u
t
h
K
o
r
e
a
M
e
x
i
c
o
0
2
4
6
8
10
12
14
16
G20 average
7.6
Tax incentives for investment in small business
Investment in infrastructure
Procurement (when government has to use small
entrepreneurs for a certain percentage of their tenders)
Simpli?ed, more ef?cient business regulatory systems
Promotion of a business environment that is not
overly litigated
High impact regulation & tax initiatives for the next three years
Simpli?cation of tax rules and regulations
Decrease in corporate income tax burden
on small businesses
Decrease in indirect tax rates such as payroll,
property taxes, etc.
Ease of doing business with the tax authority
Initiatives to improve long-term growth in entrepreneurship
Government start-up/other programs
Business incubators
Entrepreneur clubs and associations
Venture capital associations
Educators
Does culture encourage entrepreneurship?
Recent developments in formal and informal education
Entrepreneurship conferences
and seminars
Informal networks
Government programs
supporting entrepreneurship
43%
71%
70%
68%
64%
35%
30%
29%
21%
79%
54%
49%
45%
35%
32%
31%
30%
Partly agree, 33%
Neither agree nor disagree, 12%
Fully agree, 13%
Fully disagree, 18%
Partly disagree, 24%
0
1
2
3
4
5
6
7
Equal weight scores
Russia
Rapid-growth economies G20 average
E
d
u
c
a
t
i
o
n
a
n
d
t
r
a
i
n
i
n
g
T
a
x
a
n
d
r
e
g
u
l
a
t
i
o
n
E
n
t
r
e
p
r
e
n
e
u
r
s
h
i
p
c
u
l
t
u
r
e
A
c
c
e
s
s
t
o
f
u
n
d
i
n
g
C
o
o
r
d
i
n
a
t
e
d
s
u
p
p
o
r
t
Entrepreneurs’ view as to whether Russia’s culture encourages
entrepreneurship
Source: EY G20 Entrepreneurship Barometer 2013
Russia spent 1.1%
of GDP on R&D —
slightly below the
G20 average of 1.6%
(2007–09 average)
Russia’s production of
scientifc and techinical
journals (per 10,000 people)
at 1.0, was under a third
of the G20 average of 3.3
(2007–09 average)
8
European Bank for Reconstruction and Development, Diversifying Russia: Harnessing
Regional Diversity, (EBRD Publications, 2012).
6 | The power of three The power of three | 7
Tax and regulation
Pillar ranking: 9
Red tape is being cut
Russia’s entrepreneurs were asked what would be the most
effective way of boosting entrepreneurship in Russia; the
respondents focused on a reduction in the regulatory burden.
Setting up a business in Russia takes slightly longer and involves
more red tape than the G20 average, but it’s a much cheaper
process. Start-up costs amount to 2.3% of per capita income,
which is less than a quarter of the average. The costs entailed by
business failure are low too. For example, dealing with insolvency
is almost half as costly in Russia as on average in the G20 rapid-
growth countries. Overall, over 50% of local entrepreneurs believe
it is easier to start a business than it was three years ago, well
ahead of the 35% average across the G20 countries. One example
is in the time required to deal with taxes: Russia’s three-year
average is 262 hours, but as of 2012 this had actually fallen to
just 177 hours, this is a major reason why Russia made such an
improvement in The World Bank Doing Business Index report
for 2012.
Furthermore, Russia joined the World Trade Organization (WTO)
in 2012, bringing increased clarity and stability to trade-related
regulations. In general, entrepreneurial businesses in services
sectors are expected to beneft from WTO accession more than
those in goods sectors, which will face increased competition from
foreign products.
Further progress could be made by providing services to help
Russian entrepreneurs navigate regulatory requirements more
effciently. According to the survey, the two most useful initiatives
to improve regulation in the country would be the creation of
online support services (40%) and Government agencies that can
help with regulatory compliance (28%).
Tax and regulation Russia G20 average Period
Ease of starting a business
Start-up procedures (number) 8.0 7.6 2010-12 average
Time to start a business (days) 25 22 2010-12 average
Cost to start a business (% of income per capita) 2.3 9.4 2010-12 average
Paid-in minimum capital to start a business (% of income per capita) 1.6 17.9 2010-12 average
Business regulations
Time spent on tax issues (hours) 262 347 2010-12 average
Labor market rigidity
Cost of fring (weeks of wages) 52 50 2007-09 average
Labor and tax contributions (% of commercial profts) 41.2 24.0 2012
Taxation
Total tax rate (taxes and mandatory contributions borne by the
business expressed as a share of commercial proft)
54.1 49.7 2012
Indirect tax rate (taxes collected by the company and remitted to
the tax authorities)
18.0 14.2 2012
Source: The World Bank
Access to funding equal weight score
A
r
g
e
n
t
i
n
a
U
S
U
K
R
u
s
s
i
a
F
r
a
n
c
e
T
u
r
k
e
y
M
e
x
i
c
o
I
t
a
l
y
C
h
i
n
a
C
a
n
a
d
a
A
u
s
t
r
a
l
i
a
S
o
u
t
h
A
f
r
i
c
a
J
a
p
a
n
S
o
u
t
h
K
o
r
e
a
B
r
a
z
i
l
I
n
d
o
n
e
s
i
a
I
n
d
i
a
E
U
S
a
u
d
i
A
r
a
b
i
a
G
e
r
m
a
n
y
0
1
2
3
4
5
6
7
8
Top areas where govt can accelerate access to funding in headquarter country
G20 average
5.5
Time spent on tax issues
S
a
u
d
i
A
r
a
b
i
a
B
r
a
z
i
l
A
r
g
e
n
t
i
n
a
U
S
F
r
a
n
c
e
C
a
n
a
d
a
U
K
A
u
s
t
r
a
l
i
a
M
e
x
i
c
o
C
h
i
n
a
J
a
p
a
n
I
t
a
l
y
I
n
d
o
n
e
s
i
a
R
u
s
s
i
a
I
n
d
i
a
S
o
u
t
h
K
o
r
e
a
T
u
r
k
e
y
G
e
r
m
a
n
y
E
U
S
o
u
t
h
A
f
r
i
c
a
0
500
1000
1500
2000
2500
3000
G20 average
347
*annotate as 2010-2012 average
h
o
u
r
s
Number of start-up procedures
C
a
n
a
d
a
A
r
g
e
n
t
i
n
a
C
h
i
n
a
I
t
a
l
y
E
U
S
o
u
t
h
A
f
r
i
c
a
F
r
a
n
c
e
A
u
s
t
r
a
l
i
a
B
r
a
z
i
l
I
n
d
i
a
I
n
d
o
n
e
s
i
a
S
a
u
d
i
A
r
a
b
i
a
G
e
r
m
a
n
y
R
u
s
s
i
a
J
a
p
a
n
U
S
U
K
T
u
r
k
e
y
S
o
u
t
h
K
o
r
e
a
M
e
x
i
c
o
0
2
4
6
8
10
12
14
16
G20 average
7.6
Tax incentives for investment in small business
Investment in infrastructure
Procurement (when government has to use small
entrepreneurs for a certain percentage of their tenders)
Simpli?ed, more ef?cient business regulatory systems
Promotion of a business environment that is not
overly litigated
High impact regulation & tax initiatives for the next three years
Simpli?cation of tax rules and regulations
Decrease in corporate income tax burden
on small businesses
Decrease in indirect tax rates such as payroll,
property taxes, etc.
Ease of doing business with the tax authority
Initiatives to improve long-term growth in entrepreneurship
Government start-up/other programs
Business incubators
Entrepreneur clubs and associations
Venture capital associations
Educators
Does culture encourage entrepreneurship?
Recent developments in formal and informal education
Entrepreneurship conferences
and seminars
Informal networks
Government programs
supporting entrepreneurship
43%
71%
70%
68%
64%
35%
30%
29%
21%
79%
54%
49%
45%
35%
32%
31%
30%
Partly agree, 33%
Neither agree nor disagree, 12%
Fully agree, 13%
Fully disagree, 18%
Partly disagree, 24%
0
1
2
3
4
5
6
7
Equal weight scores
Russia
Rapid-growth economies G20 average
E
d
u
c
a
t
i
o
n
a
n
d
t
r
a
i
n
i
n
g
T
a
x
a
n
d
r
e
g
u
l
a
t
i
o
n
E
n
t
r
e
p
r
e
n
e
u
r
s
h
i
p
c
u
l
t
u
r
e
A
c
c
e
s
s
t
o
f
u
n
d
i
n
g
C
o
o
r
d
i
n
a
t
e
d
s
u
p
p
o
r
t
Proportion of entrepreneurs citing tax and regulation initiatives that
will have a high-impact on the long-term growth of entrepreneurship in
Russia over the next three years
Source: EY G20 Entrepreneurship Barometer 2013
At 1.6% the paid-in
minimum capital to
start a business in
Russia (as a percentage
of income per capita) is
less than a 10th of the
G20 average
8 | The power of three The power of three | 9
Education and training
Pillar ranking: 14
Skills gaps are emerging among younger age groups
Education is one of the key enablers of the growth of
entrepreneurship. Russia’s spending is broadly in line with the G20
average for education, with public expenditure averaging 4.1%
of GDP (the average is 4.8%). But there are signs that attainment
levels are slipping, and anecdotal evidence suggests that this is
having an adverse impact on growing businesses.
The proportion of the Russian population with a tertiary-level
qualifcation is one of the highest in the world, a testament to
its historic strength. However, many of these qualifcations are
held by older people, which suggest that the country’s advantage
relative to others on tertiary education will narrow over time.
Concerns about future skill levels in Russia are focused more
at the secondary level, where the country’s participation rate
is below the G20 average. In addition, its 15-year-olds score
relatively poorly in international PISA rankings for science.
9
“Skills shortages are a real bottleneck for some businesses—for
example, they might have the money to expand internationally
but fnd it diffcult to recruit people with the right marketing, sales
and strategic skills,” explains Kirill Varlamov, General Director of
Naumen, the software frm. “We need more people graduating
from higher-quality programs and also better business schools.”
Given the long lead time in developing a stronger environment
here, entrepreneurs surveyed suggest that more effective
entrepreneurship training is available through informal channels
(such as networks and mentoring) rather than through formal
education (in schools and universities). Entrepreneurship
conferences and seminars are a particular growth area, with 82%
pointing to an improvement over the last three years.
Russia also needs more entrepreneurial role models. For example,
promoting entrepreneurial success stories is seen by survey
respondents as the best way to create a more positive perspective
on entrepreneurship. Entrepreneurs such as Darberry Founder
Elena Masolova are getting directly engaged themselves. She
recently launched a new business Eduson.tv, specializing in video
lectures on business-related issues. “Experience is what really
matters and learning from others, and, particularly, exposure
to successful entrepreneurs. Our relationship with German
entrepreneurs Rocket Internet, for example, gave Darberry access
to crucial technology information, such as online marketing
technology, that was key to our success,” she says.
Education and training Russia G20 average Period
Public spending on education (% of GDP) 4.1 4.8 2008-10
average
Secondary school enrollment (total enrollment
expressed as a percentage of the population of
offcial secondary education age)
87.3 95.0 2008-10
average
Tertiary enrollment (total enrollment expressed
as a percentage of the total population of
the fve-year age group following on from
secondary school leaving)
75.3 53.5 2008-10
average
Source: The World Bank
Entrepreneurship
conferences and
seminars are a
particular growth
area, with 82% of
entrepreneurs from
Russia pointing to an
improvement over the
last three years
9
“The PISA International Database: PISA 20909,” The OECD website, pisa2009.acer.edu.au,
accessed 19 June 2013.
79%
of entrepreneurs surveyed in
Russia cite that they believe
students need access to
specifc training to become
entrepreneurs
Public spending on education (% of GDP)
Source: The World Bank, 2010–12 average
Public spending on education and training as a % of GDP
I
n
d
o
n
e
s
i
a
F
r
a
n
c
e
A
r
g
e
n
t
i
n
a
R
u
s
s
i
a
C
h
i
n
a
J
a
p
a
n
T
u
r
k
e
y
I
n
d
i
a
S
a
u
d
i
A
r
a
b
i
a
E
U
S
o
u
t
h
A
f
r
i
c
a
B
r
a
z
i
l
U
K
U
S
M
e
x
i
c
o
S
o
u
t
h
K
o
r
e
a
C
a
n
a
d
a
A
u
s
t
r
a
l
i
a
G
e
r
m
a
n
y
I
t
a
l
y
*annotate 2010-20012 average
0
1
2
3
4
5
6
7
G20 average
4.8
8 | The power of three The power of three | 9
Impressive gains in support overall
Russia performs very well in coordinated support, topping
the G20 country rankings in this area. It is important to note
that this doesn’t mean that Russia offers the highest quality
entrepreneurial support in the G20, but that entrepreneurs in
Russia were the most likely to report an improvement in support
over the past three years.
As Darberry’s Elena Masolova highlights, there has been a
vast change in awareness and support for entrepreneurship in
Russia in recent years. “When I started out, there was virtually
nothing going on for entrepreneurs in Moscow, maybe just a few
events a month. Today the mood is much more entrepreneurial;
there are seminars and workshops and master classes: lots of
possibilities for entrepreneurs to meet with and learn from other
entrepreneurs. I believe all this is the best way for entrepreneurs
to learn. Most of this initiated by private sector but the
Government is trying to be active on this front.”
Of course, more work needs to be done to build on this progress.
As specifc priorities, Russia’s entrepreneurs would like to see
more government start-up schemes, as well as improved access to
business incubators and entrepreneur clubs and associations.
Coordinated support
Pillar ranking: 1
32%
of entrepreneurs surveyed
in Russia currently use
of have used business
incubators, compared to
the G20 average of 21%
Nevertheless, the Government has ambitious plans for Russia’s
high-tech economy. It is developing a major innovation center in
Skolkovo that will focus on IT, energy effciency, nuclear power,
biomedicine and space technology. The aim of the Skolkovo center
is to create conditions that will boost innovation.
10
Scientists,
researchers, designers and engineers will work together with
entrepreneurs to commercialize innovative new technologies.
Industrial parks are one of the most effective business
development initiatives in Russia. At the end of 2012 there were
a total of 303 such parks across the country.
11
This fgure is set
to expand considerably — 50 new projects were announced in
2012 alone. Accordingly, about one in four entrepreneurs say that
access to business incubators has greatly improved over the past
three years, even though plenty of scope for growth remains.
Access to funding equal weight score
A
r
g
e
n
t
i
n
a
U
S
U
K
R
u
s
s
i
a
F
r
a
n
c
e
T
u
r
k
e
y
M
e
x
i
c
o
I
t
a
l
y
C
h
i
n
a
C
a
n
a
d
a
A
u
s
t
r
a
l
i
a
S
o
u
t
h
A
f
r
i
c
a
J
a
p
a
n
S
o
u
t
h
K
o
r
e
a
B
r
a
z
i
l
I
n
d
o
n
e
s
i
a
I
n
d
i
a
E
U
S
a
u
d
i
A
r
a
b
i
a
G
e
r
m
a
n
y
0
1
2
3
4
5
6
7
8
Top areas where govt can accelerate access to funding in headquarter country
G20 average
5.5
Time spent on tax issues
S
a
u
d
i
A
r
a
b
i
a
B
r
a
z
i
l
A
r
g
e
n
t
i
n
a
U
S
F
r
a
n
c
e
C
a
n
a
d
a
U
K
A
u
s
t
r
a
l
i
a
M
e
x
i
c
o
C
h
i
n
a
J
a
p
a
n
I
t
a
l
y
I
n
d
o
n
e
s
i
a
R
u
s
s
i
a
I
n
d
i
a
S
o
u
t
h
K
o
r
e
a
T
u
r
k
e
y
G
e
r
m
a
n
y
E
U
S
o
u
t
h
A
f
r
i
c
a
0
500
1000
1500
2000
2500
3000
G20 average
347
*annotate as 2010-2012 average
h
o
u
r
s
Number of start-up procedures
C
a
n
a
d
a
A
r
g
e
n
t
i
n
a
C
h
i
n
a
I
t
a
l
y
E
U
S
o
u
t
h
A
f
r
i
c
a
F
r
a
n
c
e
A
u
s
t
r
a
l
i
a
B
r
a
z
i
l
I
n
d
i
a
I
n
d
o
n
e
s
i
a
S
a
u
d
i
A
r
a
b
i
a
G
e
r
m
a
n
y
R
u
s
s
i
a
J
a
p
a
n
U
S
U
K
T
u
r
k
e
y
S
o
u
t
h
K
o
r
e
a
M
e
x
i
c
o
0
2
4
6
8
10
12
14
16
G20 average
7.6
Tax incentives for investment in small business
Investment in infrastructure
Procurement (when government has to use small
entrepreneurs for a certain percentage of their tenders)
Simpli?ed, more ef?cient business regulatory systems
Promotion of a business environment that is not
overly litigated
High impact regulation & tax initiatives for the next three years
Simpli?cation of tax rules and regulations
Decrease in corporate income tax burden
on small businesses
Decrease in indirect tax rates such as payroll,
property taxes, etc.
Ease of doing business with the tax authority
Initiatives to improve long-term growth in entrepreneurship
Government start-up/other programs
Business incubators
Entrepreneur clubs and associations
Venture capital associations
Educators
Does culture encourage entrepreneurship?
Recent developments in formal and informal education
Entrepreneurship conferences
and seminars
Informal networks
Government programs
supporting entrepreneurship
43%
71%
70%
68%
64%
35%
30%
29%
21%
79%
54%
49%
45%
35%
32%
31%
30%
Partly agree, 33%
Neither agree nor disagree, 12%
Fully agree, 13%
Fully disagree, 18%
Partly disagree, 24%
0
1
2
3
4
5
6
7
Equal weight scores
Russia
Rapid-growth economies G20 average
E
d
u
c
a
t
i
o
n
a
n
d
t
r
a
i
n
i
n
g
T
a
x
a
n
d
r
e
g
u
l
a
t
i
o
n
E
n
t
r
e
p
r
e
n
e
u
r
s
h
i
p
c
u
l
t
u
r
e
A
c
c
e
s
s
t
o
f
u
n
d
i
n
g
C
o
o
r
d
i
n
a
t
e
d
s
u
p
p
o
r
t
Top initiatives and organizations that can most improve long-term
growth of entrepreneurship
Source: EY G20 Entrepreneurship Barometer 2013
23%
of local entrepreneurs say
that access to Government
start-up programs has
improved greatly in the past
three years; this is nearly
four times as many as the
G20 average
10
“Russia Hopes the Skolkovo Tech City Will Produce Its Great Leap Forward,” Tech Crunch
website, techcrunch.com, accessed 27 June 2013.
11
“Industrial parks in Russia,” EY website, ey.com, accessed 31 June 2013.
10 | The power of three The power of three | 11
Rankings table
Ranking Access to
funding
Score Entrepreneurship
culture
Score Tax and
regulation
Score Education and
training
Score Coordinated
support
Score
1 United States 7.12 United States 7.67 Saudi Arabia 6.40 France 6.58 Russia 6.23
2 United Kingdom 6.86 South Korea 7.53 Canada 6.34 Australia 6.53 Mexico 5.89
3 China 6.75 Canada 7.45 South Korea 6.34 United States 6.50 Brazil 5.87
4 Canada 6.62 Japan 7.28 United Kingdom 6.19 South Korea 6.40 Indonesia 5.84
5 Australia 6.48 Australia 7.18 South Africa 6.10 EU 6.25 India 5.76
6 South Africa 5.95 United Kingdom 7.00 Japan 6.07 United Kingdom 5.98 China 5.75
7 Japan 5.81 Germany 6.88 Germany 5.84 Germany 5.89 Turkey 5.66
8 South Korea 5.75 EU 6.07 Australia 5.75 Argentina 5.85 South Africa 5.65
9 Brazil 5.67 France 5.68 Russia 5.65 Canada 5.81 Argentina 5.64
10 Indonesia 5.53 Russia 5.05 EU 5.48 Brazil 5.78 Germany 5.53
11 India 5.48 India 4.95 Turkey 5.45 South Africa 5.67 France 5.41
12 EU 5.41 Brazil 4.88 Indonesia 5.38 Saudi Arabia 5.66 Saudi Arabia 5.39
13 Saudi Arabia 5.25 Italy 4.67 United States 5.33 Italy 5.47 EU 5.37
14 Germany 5.23 South Africa 4.33 Mexico 5.21 Russia 5.46 South Korea 5.36
15 Russia 5.04 Turkey 4.30 France 5.12 Mexico 5.32 Australia 5.31
16 France 4.74 Argentina 4.06 China 5.07 Japan 4.72 Canada 5.29
17 Turkey 4.57 Mexico 3.96 Brazil 4.83 Turkey 4.39 United Kingdom 5.19
18 Mexico 4.42 China 3.88 Italy 4.76 China 4.35 Japan 5.04
19 Italy 4.03 Indonesia 3.80 India 4.39 Indonesia 3.88 Italy 4.97
20 Argentina 3.27 Saudi Arabia 3.38 Argentina 4.31 India 3.49 United States 4.85
About the EY Entrepreneurship Barometer model
The EY G20 Entrepreneurship Barometer
2013 introduces a model for scoring countries
across the fve pillars of entrepreneurship.
12
The purpose of this model is to help identify
areas of relative strength by country and where
opportunities for improvement lie.
The model is composed of qualitative
information (from our survey of more than
1,500 entrepreneurs) and quantitative data
based upon entrepreneurial conditions across
the G20 economies. For each pillar, excluding
coordinated support, this information is
weighted 50-50 between qualitative and
quantitative inputs. For coordinated support,
given a lack of quantitative indicators, this is
based solely upon the survey responses.
The advantage of integrating both the survey
results and quantitative data is the ability to
provide an assessment of the current level and
the trends in a G20 entrepreneurial ecosystem
based upon local sentiment. To this end, offcial
statistics (for example, on the average time
taken to start a business or the tax burden)
provide a baseline for each member country.
Survey information is an important
complement to the baseline picture these
statistics provide. Entrepreneurs’ feedback on
the pace of improvement or deterioration in
conditions in their country’s entrepreneurship
ecosystem is incorporated in the model
alongside the hard statistics.
Full details of the Barometer’s methodology
can be found on page 66 in the main EY G20
Entrepreneurship Barometer 2013 report.
12
Note: As per the G20 membership, this list comprises 19 individual countries and also the European Union (EU), as an additional
member. Our rankings show the performance of each country, along with an aggregate performance for the 27 EU Member States.
10 | The power of three The power of three | 11
About EY
EY is a global leader in assurance, tax, transaction and advisory services.
The insights and quality services we deliver help build trust and confidence
in the capital markets and in economies the world over. We develop
outstanding leaders who team to deliver on our promises to all of our
stakeholders. In so doing, we play a critical role in building a better working
world for our people, for our clients and for our communities.
EY refers to the global organization, and may refer to one or more, of the
member firms of Ernst & Young Global Limited, each of which is a separate
legal entity. Ernst & Young Global Limited, a UK company limited by
guarantee, does not provide services to clients. For more information about
our organization, please visit ey.com.
About EY’s Strategic Growth Markets Network
EY’s worldwide Strategic Growth Markets Network is dedicated to serving
the changing needs of high-growth companies. For more than 30 years,
we’ve helped many of the world’s most dynamic and ambitious companies
grow into market leaders. Whether working with international mid-cap
companies or early-stage venture-backed businesses, our professionals
draw upon their extensive experience, insight and global resources to help
your business succeed. ey.com/sgm
© 2013 EYGM Limited.
All Rights Reserved.
EYG no. CY0601
ED 0715
This material has been prepared for general informational purposes only and is not intended
to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors
for specific advice.
The opinions of third parties set out in this publication are not necessarily the opinions of the global
EY organization or its member firms. Moreover, they should be viewed in the context of the time they
were expressed.
ey.com
Contacts
Alexander Ivlev
Country Managing Partner,
Russia, EY
+7 495 660 4890
[email protected]
Dmitry Neverko
Strategic Growth Markets
Leader, Commonwealth of
Independent States, EY
+7 495 755 9943
[email protected]
EY | Assurance | Tax | Transactions | Advisory
doc_161677078.pdf
Brief outline in relation to the ey g20 entrepreneurship barometer 2013.
Country profles
Argentina
Australia
Brazil
Canada
China
France
Germany
India
Indonesia
Italy
Japan
Mexico
• Russia
Saudi Arabia
South Africa
South Korea
Turkey
United Kingdom
United States
European Union
The power of three
Together, governments, entrepreneurs and
corporations can spur growth across the G20
The EY G20 Entrepreneurship Barometer 2013
Russia at a glance
Russia has made substantial progress in its efforts to foster entrepreneurship — especially
considering that the country only opened up as a market economy in the 1990s. Russia
performs well in comparison to other rapid-growth markets in EY G20 Entrepreneurship
Barometer 2013, which underlines its solid overall performance in developing an ecosystem
more conducive to entrepreneurs in recent years. For those starting a new venture, there is
certainly plenty of opportunity: a growing consumer market, rising disposable income, vast
resource reserves and a highly skilled workforce.
Russia’s impressive performance in improving the coordinated
support it offers entrepreneurs is notable, and it highlights the
strongly positive sentiment on the ground in this respect. Business
incubators, dedicated industrial parks, and other forms of support
are all on the rise, ensuring the country secured frst position on
this pillar of its entrepreneurial ecosystem.
Of course, entrepreneurs still face challenges. Topping the list is
the fact that diffculties remain in accessing fnance. Thirty-fve
percent of local entrepreneurs consider it very, or somewhat,
easy to access funding, compared to 59% who think it diffcult.
This is hardly unique to Russia; however, 70% of entrepreneurs
report diffculties in accessing funding across the G20. Beyond
fnance, Russia’s regulatory burden is often cited as an obstacle by
local entrepreneurs, although the country actually scores above
average here, and improvements are being made.
Dwelling on the diffculties, however, misses an important
element of the picture: improvements in the entrepreneurial
environment and markedly positive sentiment among locals.
Only entrepreneurs from Indonesia were more positive about the
recent improvements in the conditions faced by entrepreneurs. In
particular, Russian entrepreneurs were the most likely to report
improved access to business incubators, entrepreneurial networks
and mentorship programs. They also noted marked improvements
in the problem areas of education and access to funding.
If sustained, these improvements should provide a welcome
boost to levels of entrepreneurial activity in Russia. This will be
important, not least in countering a drop in the number of new
business incorporations, which fell sharply in 2011, for example.
1
Greater efforts will be needed to help turn this around.
Alexander Ivlev
Country Managing Partner,
Russia, EY
Dmitry Neverko
Strategic Growth Markets
Leader, Commonwealth of
Independent States, EY
Russia’s entrepreneurs are positive about the future
Key facts
Overall Barometer ranking Quartile 3
Population 143,553 million
GNI per capita (PPP) US$22,760
GDP growth 3.4%
Exports as % GDP 31.1%
Source: The World Bank, 2012
1
“New business registered (number),” World Bank website, data.worldbank.org,
accessed 19 June 2013.
2 | The power of three The power of three | 3
Weaknesses
• With the exception of M&A, access to funding is among
the most limited in the G20, particularly for initial public
offerings (IPOs) and venture capital (VC).
• To build a knowledge-based economy, Russia needs to
integrate more business elements into its education
system.
• The demographic situation in Russia, particularly at the
level of Generation Y / Millennials, which coincided with
the steep post-Soviet drop in birth rates is contributing to
an increasingly tight labor market.
Opportunities
• Russia’s large, expanding consumer market continues
to be its most attractive feature, as noted by 70% of
respondents from Russia.
• Plenty of scope for improvement, given the low base that
Russia is starting from.
• Created in 2011, the Agency for Strategic Initiatives
(ASI) has the ability to push through signifcant business-
friendly reforms.
2
Threats
• Doing business in Russia remains fraught with political,
legislative and administrative issues, including corruption
and defciencies in the rule of law.
3
• The country’s over-reliance on oil exports raises questions
about the sustainability of its economic model.
4
Strengths
• Russian entrepreneurs reported great improvements
in the availability of business incubators, networks and
mentorship.
• The country has high levels of mergers and acquisitions
(M&A) funding relative to other G20 rapid-growth
economies.
• For tax and regulatory matters, Russia scores highest of
all BRIC (Brazil, Russia, India and China) economies. It also
scores higher than the EU and US.
SWOT analysis
A growing need for fnance
Russian entrepreneurs would beneft greatly from increased
efforts to ensure the availability of the fnancing they require.
Russia punches below its weight in this crucial area for
entrepreneurship, making it more diffcult for new businesses
to get off the ground and for existing businesses to expand.
The Government’s ambitious plans to expand the number of
entrepreneurial businesses should help to focus minds in this
and other areas.
Make your voice heard
Join the debate
Tweet #G20ey
ey.com/G20ey
Russia’s pillar scores compared to rapid-growth G20 economies average
Access to funding equal weight score
A
r
g
e
n
t
i
n
a
U
S
U
K
R
u
s
s
i
a
F
r
a
n
c
e
T
u
r
k
e
y
M
e
x
i
c
o
I
t
a
l
y
C
h
i
n
a
C
a
n
a
d
a
A
u
s
t
r
a
l
i
a
S
o
u
t
h
A
f
r
i
c
a
J
a
p
a
n
S
o
u
t
h
K
o
r
e
a
B
r
a
z
i
l
I
n
d
o
n
e
s
i
a
I
n
d
i
a
E
U
S
a
u
d
i
A
r
a
b
i
a
G
e
r
m
a
n
y
0
1
2
3
4
5
6
7
8
Top areas where govt can accelerate access to funding in headquarter country
G20 average
5.5
Time spent on tax issues
S
a
u
d
i
A
r
a
b
i
a
B
r
a
z
i
l
A
r
g
e
n
t
i
n
a
U
S
F
r
a
n
c
e
C
a
n
a
d
a
U
K
A
u
s
t
r
a
l
i
a
M
e
x
i
c
o
C
h
i
n
a
J
a
p
a
n
I
t
a
l
y
I
n
d
o
n
e
s
i
a
R
u
s
s
i
a
I
n
d
i
a
S
o
u
t
h
K
o
r
e
a
T
u
r
k
e
y
G
e
r
m
a
n
y
E
U
S
o
u
t
h
A
f
r
i
c
a
0
500
1000
1500
2000
2500
3000
G20 average
347
*annotate as 2010-2012 average
h
o
u
r
s
Number of start-up procedures
C
a
n
a
d
a
A
r
g
e
n
t
i
n
a
C
h
i
n
a
I
t
a
l
y
E
U
S
o
u
t
h
A
f
r
i
c
a
F
r
a
n
c
e
A
u
s
t
r
a
l
i
a
B
r
a
z
i
l
I
n
d
i
a
I
n
d
o
n
e
s
i
a
S
a
u
d
i
A
r
a
b
i
a
G
e
r
m
a
n
y
R
u
s
s
i
a
J
a
p
a
n
U
S
U
K
T
u
r
k
e
y
S
o
u
t
h
K
o
r
e
a
M
e
x
i
c
o
0
2
4
6
8
10
12
14
16
G20 average
7.6
Tax incentives for investment in small business
Investment in infrastructure
Procurement (when government has to use small
entrepreneurs for a certain percentage of their tenders)
Simpli?ed, more ef?cient business regulatory systems
Promotion of a business environment that is not
overly litigated
High impact regulation & tax initiatives for the next three years
Simpli?cation of tax rules and regulations
Decrease in corporate income tax burden
on small businesses
Decrease in indirect tax rates such as payroll,
property taxes, etc.
Ease of doing business with the tax authority
Initiatives to improve long-term growth in entrepreneurship
Government start-up/other programs
Business incubators
Entrepreneur clubs and associations
Venture capital associations
Educators
Does culture encourage entrepreneurship?
Recent developments in formal and informal education
Entrepreneurship conferences
and seminars
Informal networks
Government programs
supporting entrepreneurship
43%
71%
70%
68%
64%
35%
30%
29%
21%
79%
54%
49%
45%
35%
32%
31%
30%
Partly agree, 33%
Neither agree nor disagree, 12%
Fully agree, 13%
Fully disagree, 18%
Partly disagree, 24%
0
1
2
3
4
5
6
7
Equal weight scores
Russia
Rapid-growth economies G20 average
E
d
u
c
a
t
i
o
n
a
n
d
t
r
a
i
n
i
n
g
T
a
x
a
n
d
r
e
g
u
la
t
io
n
E
n
t
r
e
p
r
e
n
e
u
r
s
h
i
p
c
u
l
t
u
r
e
A
c
c
e
s
s
t
o
f
u
n
d
i
n
g
C
o
o
r
d
i
n
a
t
e
d
s
u
p
p
o
r
t
Source: EY G20 Entrepreneurship Barometer 2013
2
“Agency to support medium-sized businesses starts work in Russia,” The Voice of
Russia website, voiceofrussia.com, accessed 22 June 2013.
3
“Russia’s growth stifed by corruption,” BBC News website, bbc.co.uk/news, accessed
29 June 2013.
4
“Economy: Oil dependency remains a fundamental weakness,” Financial Times website,
ft.com, accessed 2 July 2013.
2 | The power of three The power of three | 3
What to watch for
Bureaucratic barriers start to fall
In the EY G20 Entrepreneurship Barometer 2013, Russia ranks
above average, including ahead of all other BRIC economies in
the tax and regulation pillar, contrary to popular perception. This
refects important changes in the focus of the Government’s
policy. Offcials have been actively searching for ways to improve
the business environment for entrepreneurs, as part of their drive
to double the contribution of entrepreneurial businesses to GDP
so that they account for roughly 50% by 2020.
5
Overseeing this work has been the ASI, which was created in
2011 to improve conditions for entrepreneurs and facilitate
dialogue between business and government. The ASI’s goal is to
move Russia to 20th position in The World Bank’s Ease of Doing
Business Index by 2018 (from 112th in 2012).
6
To achieve this,
it has worked with businesses to identify 22 critical areas for
improvement, ranging from increasing competition to reforming
customs regulation.
Given the political will, it is not surprising that some positive
change is already apparent. For example, the number of
procedures involved in starting a business fell from nine in 2011
to eight in 2012. And the time it takes to start a business fell from
29 days to 18 during the same period, while the cost of doing so
dropped from 2.6% of average income in 2010 to 2.0% in 2012.
The average time entrepreneurs spend annually on their tax
affairs has decreased from 290 to 177 hours, freeing up around
three weeks for more productive activity. Indeed, in The World
Bank Doing Business Index report, Russia moved up 41 positions
in Tax Administration, since 2011. This is the best improvement of
any G20 country. Each of these areas of progress helps make life a
little easier for Russia’s entrepreneurs.
Time spent on tax issues
Access to funding equal weight score
A
r
g
e
n
t
i
n
a
U
S
U
K
R
u
s
s
i
a
F
r
a
n
c
e
T
u
r
k
e
y
M
e
x
i
c
o
I
t
a
l
y
C
h
i
n
a
C
a
n
a
d
a
A
u
s
t
r
a
l
i
a
S
o
u
t
h
A
f
r
i
c
a
J
a
p
a
n
S
o
u
t
h
K
o
r
e
a
B
r
a
z
i
l
I
n
d
o
n
e
s
i
a
I
n
d
i
a
E
U
S
a
u
d
i
A
r
a
b
i
a
G
e
r
m
a
n
y
0
1
2
3
4
5
6
7
8
Top areas where govt can accelerate access to funding in headquarter country
G20 average
5.5
Time spent on tax issues
S
a
u
d
i
A
r
a
b
i
a
B
r
a
z
i
l
A
r
g
e
n
t
i
n
a
U
S
F
r
a
n
c
e
C
a
n
a
d
a
U
K
A
u
s
t
r
a
l
i
a
M
e
x
i
c
o
C
h
i
n
a
J
a
p
a
n
I
t
a
l
y
I
n
d
o
n
e
s
i
a
R
u
s
s
i
a
I
n
d
i
a
S
o
u
t
h
K
o
r
e
a
T
u
r
k
e
y
G
e
r
m
a
n
y
E
U
S
o
u
t
h
A
f
r
i
c
a
0
500
1000
1500
2000
2500
3000
G20 average
347
*annotate as 2010-2012 average
h
o
u
r
s
Number of start-up procedures
C
a
n
a
d
a
A
r
g
e
n
t
i
n
a
C
h
i
n
a
I
t
a
l
y
E
U
S
o
u
t
h
A
f
r
i
c
a
F
r
a
n
c
e
A
u
s
t
r
a
l
i
a
B
r
a
z
i
l
I
n
d
i
a
I
n
d
o
n
e
s
i
a
S
a
u
d
i
A
r
a
b
i
a
G
e
r
m
a
n
y
R
u
s
s
i
a
J
a
p
a
n
U
S
U
K
T
u
r
k
e
y
S
o
u
t
h
K
o
r
e
a
M
e
x
i
c
o
0
2
4
6
8
10
12
14
16
G20 average
7.6
Tax incentives for investment in small business
Investment in infrastructure
Procurement (when government has to use small
entrepreneurs for a certain percentage of their tenders)
Simpli?ed, more ef?cient business regulatory systems
Promotion of a business environment that is not
overly litigated
High impact regulation & tax initiatives for the next three years
Simpli?cation of tax rules and regulations
Decrease in corporate income tax burden
on small businesses
Decrease in indirect tax rates such as payroll,
property taxes, etc.
Ease of doing business with the tax authority
Initiatives to improve long-term growth in entrepreneurship
Government start-up/other programs
Business incubators
Entrepreneur clubs and associations
Venture capital associations
Educators
Does culture encourage entrepreneurship?
Recent developments in formal and informal education
Entrepreneurship conferences
and seminars
Informal networks
Government programs
supporting entrepreneurship
43%
71%
70%
68%
64%
35%
30%
29%
21%
79%
54%
49%
45%
35%
32%
31%
30%
Partly agree, 33%
Neither agree nor disagree, 12%
Fully agree, 13%
Fully disagree, 18%
Partly disagree, 24%
0
1
2
3
4
5
6
7
Equal weight scores
Russia
Rapid-growth economies G20 average
E
d
u
c
a
t
io
n
a
n
d
t
r
a
in
in
g
T
a
x
a
n
d
r
e
g
u
la
t
io
n
E
n
t
r
e
p
r
e
n
e
u
r
s
h
ip
c
u
lt
u
r
e
A
c
c
e
s
s
t
o
f
u
n
d
in
g
C
o
o
r
d
in
a
t
e
d
s
u
p
p
o
r
t
Source: The World Bank, 2010–12 average
Number of start-up procedures
Access to funding equal weight score
A
r
g
e
n
t
i
n
a
U
S
U
K
R
u
s
s
i
a
F
r
a
n
c
e
T
u
r
k
e
y
M
e
x
i
c
o
I
t
a
l
y
C
h
i
n
a
C
a
n
a
d
a
A
u
s
t
r
a
l
i
a
S
o
u
t
h
A
f
r
i
c
a
J
a
p
a
n
S
o
u
t
h
K
o
r
e
a
B
r
a
z
i
l
I
n
d
o
n
e
s
i
a
I
n
d
i
a
E
U
S
a
u
d
i
A
r
a
b
i
a
G
e
r
m
a
n
y
0
1
2
3
4
5
6
7
8
Top areas where govt can accelerate access to funding in headquarter country
G20 average
5.5
Time spent on tax issues
S
a
u
d
i
A
r
a
b
i
a
B
r
a
z
i
l
A
r
g
e
n
t
i
n
a
U
S
F
r
a
n
c
e
C
a
n
a
d
a
U
K
A
u
s
t
r
a
l
i
a
M
e
x
i
c
o
C
h
i
n
a
J
a
p
a
n
I
t
a
l
y
I
n
d
o
n
e
s
i
a
R
u
s
s
i
a
I
n
d
i
a
S
o
u
t
h
K
o
r
e
a
T
u
r
k
e
y
G
e
r
m
a
n
y
E
U
S
o
u
t
h
A
f
r
i
c
a
0
500
1000
1500
2000
2500
3000
G20 average
347
*annotate as 2010-2012 average
h
o
u
r
s
Number of start-up procedures
C
a
n
a
d
a
A
r
g
e
n
t
i
n
a
C
h
i
n
a
I
t
a
l
y
E
U
S
o
u
t
h
A
f
r
i
c
a
F
r
a
n
c
e
A
u
s
t
r
a
l
i
a
B
r
a
z
i
l
I
n
d
i
a
I
n
d
o
n
e
s
i
a
S
a
u
d
i
A
r
a
b
i
a
G
e
r
m
a
n
y
R
u
s
s
i
a
J
a
p
a
n
U
S
U
K
T
u
r
k
e
y
S
o
u
t
h
K
o
r
e
a
M
e
x
i
c
o
0
2
4
6
8
10
12
14
16
G20 average
7.6
Tax incentives for investment in small business
Investment in infrastructure
Procurement (when government has to use small
entrepreneurs for a certain percentage of their tenders)
Simpli?ed, more ef?cient business regulatory systems
Promotion of a business environment that is not
overly litigated
High impact regulation & tax initiatives for the next three years
Simpli?cation of tax rules and regulations
Decrease in corporate income tax burden
on small businesses
Decrease in indirect tax rates such as payroll,
property taxes, etc.
Ease of doing business with the tax authority
Initiatives to improve long-term growth in entrepreneurship
Government start-up/other programs
Business incubators
Entrepreneur clubs and associations
Venture capital associations
Educators
Does culture encourage entrepreneurship?
Recent developments in formal and informal education
Entrepreneurship conferences
and seminars
Informal networks
Government programs
supporting entrepreneurship
43%
71%
70%
68%
64%
35%
30%
29%
21%
79%
54%
49%
45%
35%
32%
31%
30%
Partly agree, 33%
Neither agree nor disagree, 12%
Fully agree, 13%
Fully disagree, 18%
Partly disagree, 24%
0
1
2
3
4
5
6
7
Equal weight scores
Russia
Rapid-growth economies G20 average
E
d
u
c
a
t
io
n
a
n
d
t
r
a
in
in
g
T
a
x
a
n
d
r
e
g
u
la
t
io
n
E
n
t
r
e
p
r
e
n
e
u
r
s
h
ip
c
u
lt
u
r
e
A
c
c
e
s
s
t
o
f
u
n
d
in
g
C
o
o
r
d
in
a
t
e
d
s
u
p
p
o
r
t
Source: The World Bank, 2010–12 average
double
the entrepreneurial
businesses’ contribution
to GDP by 2020
The Government plans to
5
“Russia: SME funding — Building a New Russia,” Syminvest website, syminvest.com,
accessed 4 June 2013.
6
“Russian government offcial: Russia should rise to 20th place in annual Doing Business
Rating,” ITAR-TASS News Agency website, itar-tass.com, accessed 27 July 2013.
4 | The power of three The power of three | 5
An ombudsman for
entrepreneurs
The Government has appointed
an ombudsman to safeguard
entrepreneurs’ rights. It will
act to defend business rights
in court, suspend agency-level
regulations upon court order and
ask the court to suspend offcials’
actions as an interim measure
where appropriate. All of this will
bolster the legal support for those
embarking on new ventures.
Launch date: 2012
Most relevant pillars: coordinated
support, tax and regulation
Rusnano — The Russian
Government’s venture
capital frm
Rusnano invests in niche
companies operating in the
nanotechnology domain.
It is committed to projects
in industries with high
technological potential, such as
microelectronics, biotechnology,
energy, aviation and rocket-space
complex. So far, it has invested
US$6.3b in more than 100 frms
within and outside Russia.
Launch date: 2007
Most relevant pillar: access to
funding
One-stop shop system for
new projects
The Ministry of Investment Policy
(MIP) or Investment Development
Agencies (IDA) act as a one-stop
organizational support system
for entrepreneurs and investors
in every region of Russia. These
bodies have signifcantly reduced
the time and effort spent by
prospective entrepreneurs on
obtaining licenses, permissions
and approvals. For example,
to obtain land or premises,
an entrepreneur can now
communicate only with the MIPs
or IDAs, instead of two dozen
separate Government agencies,
as before.
Launch date: 2005
Most relevant pillar: tax and
regulation
How the government is helping
Key insight: bridging the funding gap
Kirill Varlamov, General Director, Naumen, Russia
Kirill Varlamov is general director of Naumen, Russia’s leading
provider of call-center software solutions. He is also the head
of Internet Initiatives Development Fund.
When looking at the hard data, the availability of fnance for
entrepreneurs remains relatively low, but this masks some more
positive perceptions on the ground, explains Kirill Varlamov, the
general director of Naumen, a software company and the head
of newly formed Internet Initiatives Development Fund (FRII).
“There has been a huge development with a lot more institutes
and funds now supporting small and growing businesses. There
are many programs you can take part in and get money from.”
Much of this comes off the back of strong Government efforts,
seeking to ensure funding for entrepreneurs at varying stages
of growth, from start-ups to fast-growth businesses. “These
funding programs have worked quite well. Some of these funds
provide grants for educational and development purposes,
allowing entrepreneurs to use this to try and create a frst
product concept, before moving further,” explains Varlamov.
“In general, seed funding has been less available, but the
Government has just announced its support of a US$200
million fund to invest in internet start-ups (FRII). This fund
will pay a lot of attention to businesses at the very earliest
stages of development. Its purpose is not only to provide them
with money, but also to build all the necessary infrastructure
elements for the successful development of internet industry
in Russia.”
The next challenge, as he sees it, lies in bolstering the business
education system, to ensure a stronger supply of qualifed
staff. “Education is probably the weakest area of the Russian
entrepreneurship ecosystem. We need more programs and
higher quality. In particular, we badly need world-class training
at MBA level,” explains Varmalov.
4 | The power of three The power of three | 5
Access to funding
Pillar ranking: 15
The biggest challenge for Russia’s entrepreneurs
The weakest aspect of Russia’s overall entrepreneurial ecosystem
is its performance on access to funding. Overall, 59% of local
entrepreneurs say it is either somewhat or very diffcult to
gain access to funding. In particular, domestic credit to the
private sector is below the G20 average, although the Russian
SME Resource Centre (RCSME) recently reported that the
entrepreneurial business share of new business lending had
increased from 16% in 2009 to 20% in 2012, highlighting an
encouraging improvement.
Overall, the country’s performance on differing sources of
funding varies. For example, the total value of mergers and
acquisitions (M&A) deals is among the highest in the G20 at 5.0%
(as a proportion of GDP), well above the average of 3.0%, while
on venture capital (VC) Russia scores below the rapid-growth
countries average for ease of securing funding. However, the pace
of VC growth has accelerated in recent years, nearly doubling to
US$1b in 2012, from US$500m in 2011, according to a report by
RVC and the Ministry of Economic Development.
7
In 2012 the Moscow Exchange’s Innovation and Investment
Market launched IPOboard, an online information and trading
system that helps innovative companies to raise M&A and venture
capital. The project has been developed in close cooperation with
the Russian Venture Company, Rusnano and other Russian state
institutions that endorse innovation. This will help, given that
Russia performs weakly on the level of investment raised through
IPOs. As a proportion of GDP, Russian IPOs raise 20 times less
than the G20 average.
In the survey, respondents from Russia identifed tax incentives
for investors as the most signifcant measure the Government
could introduce to boost access to funding. Added to this,
Naumen’s Varlamov argues that interests rates could be lower,
to help reduce the cost of commercial loans and support
entrepreneurs.
Access to funding Russia G20 average Period
IPO market activity
IPO amount invested
(% of GDP)
0.01 0.22 2009-11
average
Access to credit
Domestic credit to private
sector (% of GDP)
44.5 99.0 2008-10
average
Venture capital availability
(Scale of 1=impossible to
7=very easy)
2.3 3.0 2009-11
average
M&A deal value
(% of GDP)
5.0 3.4 2010-12
average
Sources: The World Bank, Dealogic, IMF, World Economic Forum
59%
of local entrepreneurs
surveyed say that it is
diffcult to access funding
in Russia
Access to funding equal weight score
A
r
g
e
n
t
i
n
a
U
S
U
K
R
u
s
s
i
a
F
r
a
n
c
e
T
u
r
k
e
y
M
e
x
i
c
o
I
t
a
l
y
C
h
i
n
a
C
a
n
a
d
a
A
u
s
t
r
a
l
i
a
S
o
u
t
h
A
f
r
i
c
a
J
a
p
a
n
S
o
u
t
h
K
o
r
e
a
B
r
a
z
i
l
I
n
d
o
n
e
s
i
a
I
n
d
i
a
E
U
S
a
u
d
i
A
r
a
b
i
a
G
e
r
m
a
n
y
0
1
2
3
4
5
6
7
8
Top areas where govt can accelerate access to funding in headquarter country
G20 average
5.5
Time spent on tax issues
S
a
u
d
i
A
r
a
b
i
a
B
r
a
z
i
l
A
r
g
e
n
t
i
n
a
U
S
F
r
a
n
c
e
C
a
n
a
d
a
U
K
A
u
s
t
r
a
l
i
a
M
e
x
i
c
o
C
h
i
n
a
J
a
p
a
n
I
t
a
l
y
I
n
d
o
n
e
s
i
a
R
u
s
s
i
a
I
n
d
i
a
S
o
u
t
h
K
o
r
e
a
T
u
r
k
e
y
G
e
r
m
a
n
y
E
U
S
o
u
t
h
A
f
r
i
c
a
0
500
1000
1500
2000
2500
3000
G20 average
347
*annotate as 2010-2012 average
h
o
u
r
s
Number of start-up procedures
C
a
n
a
d
a
A
r
g
e
n
t
i
n
a
C
h
i
n
a
I
t
a
l
y
E
U
S
o
u
t
h
A
f
r
i
c
a
F
r
a
n
c
e
A
u
s
t
r
a
l
i
a
B
r
a
z
i
l
I
n
d
i
a
I
n
d
o
n
e
s
i
a
S
a
u
d
i
A
r
a
b
i
a
G
e
r
m
a
n
y
R
u
s
s
i
a
J
a
p
a
n
U
S
U
K
T
u
r
k
e
y
S
o
u
t
h
K
o
r
e
a
M
e
x
i
c
o
0
2
4
6
8
10
12
14
16
G20 average
7.6
Tax incentives for investment in small business
Investment in infrastructure
Procurement (when government has to use small
entrepreneurs for a certain percentage of their tenders)
Simpli?ed, more ef?cient business regulatory systems
Promotion of a business environment that is not
overly litigated
High impact regulation & tax initiatives for the next three years
Simpli?cation of tax rules and regulations
Decrease in corporate income tax burden
on small businesses
Decrease in indirect tax rates such as payroll,
property taxes, etc.
Ease of doing business with the tax authority
Initiatives to improve long-term growth in entrepreneurship
Government start-up/other programs
Business incubators
Entrepreneur clubs and associations
Venture capital associations
Educators
Does culture encourage entrepreneurship?
Recent developments in formal and informal education
Entrepreneurship conferences
and seminars
Informal networks
Government programs
supporting entrepreneurship
43%
71%
70%
68%
64%
35%
30%
29%
21%
79%
54%
49%
45%
35%
32%
31%
30%
Partly agree, 33%
Neither agree nor disagree, 12%
Fully agree, 13%
Fully disagree, 18%
Partly disagree, 24%
0
1
2
3
4
5
6
7
Equal weight scores
Russia
Rapid-growth economies G20 average
E
d
u
c
a
t
i
o
n
a
n
d
t
r
a
i
n
i
n
g
T
a
x
a
n
d
r
e
g
u
la
t
io
n
E
n
t
r
e
p
r
e
n
e
u
r
s
h
i
p
c
u
l
t
u
r
e
A
c
c
e
s
s
t
o
f
u
n
d
i
n
g
C
o
o
r
d
i
n
a
t
e
d
s
u
p
p
o
r
t
Top fve areas where Government can accelerate access to funding
Source: EY G20 Entrepreneurship Barometer 2013
Domestic credit to the private
sector at 44.5% of Russian
GDP was less than half the
G20 average of 99.0%
(2009–11 average)
7
“RVC and Ministry of Economic Development released report on implementation
innovative development strategy,” RVC website, rusventure.ru, accessed 29 June 2013.
6 | The power of three The power of three | 7
Entrepreneurship culture
Pillar ranking: 10
Russia’s entrepreneurs need to assume
a bigger role in driving innovation
Less than 30 years after Russia established a market economy,
efforts to boost enterprise are held back by an entrepreneurship
culture by the fact entrepreneurship is yet to be fully embedded
in Russian culture. Fewer than half of local respondents agreed
that their culture is supportive of entrepreneurship or that it is
encouraged as a career choice.
Still, it was striking how optimistic Russia’s entrepreneurs are in
their responses to the questions about trends over the last three
years. Their sense that things are improving may partly refect the
low base from which the country is starting, but it also points to a
degree of engagement and enthusiasm among entrepreneurs that
will be important if entrepreneurship is to take root more frmly in
the country.
A growing number of entrepreneur role models would also help
here, by encouraging young people to consider the potential for
starting their own ventures. Elena Masolova, a serial entrepreneur
and founder of Darberry (a coupon service later bought by
Groupon), Pixonic and investment fund AddVenture, explains how
she was inspired by reading about icons such as Richard Branson
and Steve Jobs. “These examples also allow you to learn about
successful business models that work in other countries. But we
need more homegrown high-profle Russian success stories,”
she says.
In terms of its innovation culture, Russia has a pressing need
for new, scalable businesses built on research and development
(R&D). The country spends around 1.1% of its GDP on R&D and
has a strong reputation in some sectors, including aerospace
and nuclear power. But this doesn’t trickle down effectively
to entrepreneurs right now: most Russian R&D is carried out
in public institutes that have weak commercial linkages, while
most business R&D is concentrated in larger frms.
8
Only a small
number of entrepreneurial high-tech businesses are active in
R&D. Greater emphasis could be given to encourage clearer
links between universities and entrepreneurs, in order to foster
increased commercialization of R&D efforts.
Entrepreneurship
culture
Russia G20 average Period
R&D spending (% of GDP) 1.1 1.6 2007-09
average
Scientifc and technical
journal articles (per
10,000 people)
1.0 3.3 2007-09
average
Cost of resolving
insolvency (% of estate)
9.0 11.8 2010-12
average
Source: The World Bank
Access to funding equal weight score
A
r
g
e
n
t
i
n
a
U
S
U
K
R
u
s
s
i
a
F
r
a
n
c
e
T
u
r
k
e
y
M
e
x
i
c
o
I
t
a
l
y
C
h
i
n
a
C
a
n
a
d
a
A
u
s
t
r
a
l
i
a
S
o
u
t
h
A
f
r
i
c
a
J
a
p
a
n
S
o
u
t
h
K
o
r
e
a
B
r
a
z
i
l
I
n
d
o
n
e
s
i
a
I
n
d
i
a
E
U
S
a
u
d
i
A
r
a
b
i
a
G
e
r
m
a
n
y
0
1
2
3
4
5
6
7
8
Top areas where govt can accelerate access to funding in headquarter country
G20 average
5.5
Time spent on tax issues
S
a
u
d
i
A
r
a
b
i
a
B
r
a
z
i
l
A
r
g
e
n
t
i
n
a
U
S
F
r
a
n
c
e
C
a
n
a
d
a
U
K
A
u
s
t
r
a
l
i
a
M
e
x
i
c
o
C
h
i
n
a
J
a
p
a
n
I
t
a
l
y
I
n
d
o
n
e
s
i
a
R
u
s
s
i
a
I
n
d
i
a
S
o
u
t
h
K
o
r
e
a
T
u
r
k
e
y
G
e
r
m
a
n
y
E
U
S
o
u
t
h
A
f
r
i
c
a
0
500
1000
1500
2000
2500
3000
G20 average
347
*annotate as 2010-2012 average
h
o
u
r
s
Number of start-up procedures
C
a
n
a
d
a
A
r
g
e
n
t
i
n
a
C
h
i
n
a
I
t
a
l
y
E
U
S
o
u
t
h
A
f
r
i
c
a
F
r
a
n
c
e
A
u
s
t
r
a
l
i
a
B
r
a
z
i
l
I
n
d
i
a
I
n
d
o
n
e
s
i
a
S
a
u
d
i
A
r
a
b
i
a
G
e
r
m
a
n
y
R
u
s
s
i
a
J
a
p
a
n
U
S
U
K
T
u
r
k
e
y
S
o
u
t
h
K
o
r
e
a
M
e
x
i
c
o
0
2
4
6
8
10
12
14
16
G20 average
7.6
Tax incentives for investment in small business
Investment in infrastructure
Procurement (when government has to use small
entrepreneurs for a certain percentage of their tenders)
Simpli?ed, more ef?cient business regulatory systems
Promotion of a business environment that is not
overly litigated
High impact regulation & tax initiatives for the next three years
Simpli?cation of tax rules and regulations
Decrease in corporate income tax burden
on small businesses
Decrease in indirect tax rates such as payroll,
property taxes, etc.
Ease of doing business with the tax authority
Initiatives to improve long-term growth in entrepreneurship
Government start-up/other programs
Business incubators
Entrepreneur clubs and associations
Venture capital associations
Educators
Does culture encourage entrepreneurship?
Recent developments in formal and informal education
Entrepreneurship conferences
and seminars
Informal networks
Government programs
supporting entrepreneurship
43%
71%
70%
68%
64%
35%
30%
29%
21%
79%
54%
49%
45%
35%
32%
31%
30%
Partly agree, 33%
Neither agree nor disagree, 12%
Fully agree, 13%
Fully disagree, 18%
Partly disagree, 24%
0
1
2
3
4
5
6
7
Equal weight scores
Russia
Rapid-growth economies G20 average
E
d
u
c
a
t
i
o
n
a
n
d
t
r
a
i
n
i
n
g
T
a
x
a
n
d
r
e
g
u
l
a
t
i
o
n
E
n
t
r
e
p
r
e
n
e
u
r
s
h
i
p
c
u
l
t
u
r
e
A
c
c
e
s
s
t
o
f
u
n
d
i
n
g
C
o
o
r
d
i
n
a
t
e
d
s
u
p
p
o
r
t
Entrepreneurs’ view as to whether Russia’s culture encourages
entrepreneurship
Source: EY G20 Entrepreneurship Barometer 2013
Russia spent 1.1%
of GDP on R&D —
slightly below the
G20 average of 1.6%
(2007–09 average)
Russia’s production of
scientifc and techinical
journals (per 10,000 people)
at 1.0, was under a third
of the G20 average of 3.3
(2007–09 average)
8
European Bank for Reconstruction and Development, Diversifying Russia: Harnessing
Regional Diversity, (EBRD Publications, 2012).
6 | The power of three The power of three | 7
Tax and regulation
Pillar ranking: 9
Red tape is being cut
Russia’s entrepreneurs were asked what would be the most
effective way of boosting entrepreneurship in Russia; the
respondents focused on a reduction in the regulatory burden.
Setting up a business in Russia takes slightly longer and involves
more red tape than the G20 average, but it’s a much cheaper
process. Start-up costs amount to 2.3% of per capita income,
which is less than a quarter of the average. The costs entailed by
business failure are low too. For example, dealing with insolvency
is almost half as costly in Russia as on average in the G20 rapid-
growth countries. Overall, over 50% of local entrepreneurs believe
it is easier to start a business than it was three years ago, well
ahead of the 35% average across the G20 countries. One example
is in the time required to deal with taxes: Russia’s three-year
average is 262 hours, but as of 2012 this had actually fallen to
just 177 hours, this is a major reason why Russia made such an
improvement in The World Bank Doing Business Index report
for 2012.
Furthermore, Russia joined the World Trade Organization (WTO)
in 2012, bringing increased clarity and stability to trade-related
regulations. In general, entrepreneurial businesses in services
sectors are expected to beneft from WTO accession more than
those in goods sectors, which will face increased competition from
foreign products.
Further progress could be made by providing services to help
Russian entrepreneurs navigate regulatory requirements more
effciently. According to the survey, the two most useful initiatives
to improve regulation in the country would be the creation of
online support services (40%) and Government agencies that can
help with regulatory compliance (28%).
Tax and regulation Russia G20 average Period
Ease of starting a business
Start-up procedures (number) 8.0 7.6 2010-12 average
Time to start a business (days) 25 22 2010-12 average
Cost to start a business (% of income per capita) 2.3 9.4 2010-12 average
Paid-in minimum capital to start a business (% of income per capita) 1.6 17.9 2010-12 average
Business regulations
Time spent on tax issues (hours) 262 347 2010-12 average
Labor market rigidity
Cost of fring (weeks of wages) 52 50 2007-09 average
Labor and tax contributions (% of commercial profts) 41.2 24.0 2012
Taxation
Total tax rate (taxes and mandatory contributions borne by the
business expressed as a share of commercial proft)
54.1 49.7 2012
Indirect tax rate (taxes collected by the company and remitted to
the tax authorities)
18.0 14.2 2012
Source: The World Bank
Access to funding equal weight score
A
r
g
e
n
t
i
n
a
U
S
U
K
R
u
s
s
i
a
F
r
a
n
c
e
T
u
r
k
e
y
M
e
x
i
c
o
I
t
a
l
y
C
h
i
n
a
C
a
n
a
d
a
A
u
s
t
r
a
l
i
a
S
o
u
t
h
A
f
r
i
c
a
J
a
p
a
n
S
o
u
t
h
K
o
r
e
a
B
r
a
z
i
l
I
n
d
o
n
e
s
i
a
I
n
d
i
a
E
U
S
a
u
d
i
A
r
a
b
i
a
G
e
r
m
a
n
y
0
1
2
3
4
5
6
7
8
Top areas where govt can accelerate access to funding in headquarter country
G20 average
5.5
Time spent on tax issues
S
a
u
d
i
A
r
a
b
i
a
B
r
a
z
i
l
A
r
g
e
n
t
i
n
a
U
S
F
r
a
n
c
e
C
a
n
a
d
a
U
K
A
u
s
t
r
a
l
i
a
M
e
x
i
c
o
C
h
i
n
a
J
a
p
a
n
I
t
a
l
y
I
n
d
o
n
e
s
i
a
R
u
s
s
i
a
I
n
d
i
a
S
o
u
t
h
K
o
r
e
a
T
u
r
k
e
y
G
e
r
m
a
n
y
E
U
S
o
u
t
h
A
f
r
i
c
a
0
500
1000
1500
2000
2500
3000
G20 average
347
*annotate as 2010-2012 average
h
o
u
r
s
Number of start-up procedures
C
a
n
a
d
a
A
r
g
e
n
t
i
n
a
C
h
i
n
a
I
t
a
l
y
E
U
S
o
u
t
h
A
f
r
i
c
a
F
r
a
n
c
e
A
u
s
t
r
a
l
i
a
B
r
a
z
i
l
I
n
d
i
a
I
n
d
o
n
e
s
i
a
S
a
u
d
i
A
r
a
b
i
a
G
e
r
m
a
n
y
R
u
s
s
i
a
J
a
p
a
n
U
S
U
K
T
u
r
k
e
y
S
o
u
t
h
K
o
r
e
a
M
e
x
i
c
o
0
2
4
6
8
10
12
14
16
G20 average
7.6
Tax incentives for investment in small business
Investment in infrastructure
Procurement (when government has to use small
entrepreneurs for a certain percentage of their tenders)
Simpli?ed, more ef?cient business regulatory systems
Promotion of a business environment that is not
overly litigated
High impact regulation & tax initiatives for the next three years
Simpli?cation of tax rules and regulations
Decrease in corporate income tax burden
on small businesses
Decrease in indirect tax rates such as payroll,
property taxes, etc.
Ease of doing business with the tax authority
Initiatives to improve long-term growth in entrepreneurship
Government start-up/other programs
Business incubators
Entrepreneur clubs and associations
Venture capital associations
Educators
Does culture encourage entrepreneurship?
Recent developments in formal and informal education
Entrepreneurship conferences
and seminars
Informal networks
Government programs
supporting entrepreneurship
43%
71%
70%
68%
64%
35%
30%
29%
21%
79%
54%
49%
45%
35%
32%
31%
30%
Partly agree, 33%
Neither agree nor disagree, 12%
Fully agree, 13%
Fully disagree, 18%
Partly disagree, 24%
0
1
2
3
4
5
6
7
Equal weight scores
Russia
Rapid-growth economies G20 average
E
d
u
c
a
t
i
o
n
a
n
d
t
r
a
i
n
i
n
g
T
a
x
a
n
d
r
e
g
u
l
a
t
i
o
n
E
n
t
r
e
p
r
e
n
e
u
r
s
h
i
p
c
u
l
t
u
r
e
A
c
c
e
s
s
t
o
f
u
n
d
i
n
g
C
o
o
r
d
i
n
a
t
e
d
s
u
p
p
o
r
t
Proportion of entrepreneurs citing tax and regulation initiatives that
will have a high-impact on the long-term growth of entrepreneurship in
Russia over the next three years
Source: EY G20 Entrepreneurship Barometer 2013
At 1.6% the paid-in
minimum capital to
start a business in
Russia (as a percentage
of income per capita) is
less than a 10th of the
G20 average
8 | The power of three The power of three | 9
Education and training
Pillar ranking: 14
Skills gaps are emerging among younger age groups
Education is one of the key enablers of the growth of
entrepreneurship. Russia’s spending is broadly in line with the G20
average for education, with public expenditure averaging 4.1%
of GDP (the average is 4.8%). But there are signs that attainment
levels are slipping, and anecdotal evidence suggests that this is
having an adverse impact on growing businesses.
The proportion of the Russian population with a tertiary-level
qualifcation is one of the highest in the world, a testament to
its historic strength. However, many of these qualifcations are
held by older people, which suggest that the country’s advantage
relative to others on tertiary education will narrow over time.
Concerns about future skill levels in Russia are focused more
at the secondary level, where the country’s participation rate
is below the G20 average. In addition, its 15-year-olds score
relatively poorly in international PISA rankings for science.
9
“Skills shortages are a real bottleneck for some businesses—for
example, they might have the money to expand internationally
but fnd it diffcult to recruit people with the right marketing, sales
and strategic skills,” explains Kirill Varlamov, General Director of
Naumen, the software frm. “We need more people graduating
from higher-quality programs and also better business schools.”
Given the long lead time in developing a stronger environment
here, entrepreneurs surveyed suggest that more effective
entrepreneurship training is available through informal channels
(such as networks and mentoring) rather than through formal
education (in schools and universities). Entrepreneurship
conferences and seminars are a particular growth area, with 82%
pointing to an improvement over the last three years.
Russia also needs more entrepreneurial role models. For example,
promoting entrepreneurial success stories is seen by survey
respondents as the best way to create a more positive perspective
on entrepreneurship. Entrepreneurs such as Darberry Founder
Elena Masolova are getting directly engaged themselves. She
recently launched a new business Eduson.tv, specializing in video
lectures on business-related issues. “Experience is what really
matters and learning from others, and, particularly, exposure
to successful entrepreneurs. Our relationship with German
entrepreneurs Rocket Internet, for example, gave Darberry access
to crucial technology information, such as online marketing
technology, that was key to our success,” she says.
Education and training Russia G20 average Period
Public spending on education (% of GDP) 4.1 4.8 2008-10
average
Secondary school enrollment (total enrollment
expressed as a percentage of the population of
offcial secondary education age)
87.3 95.0 2008-10
average
Tertiary enrollment (total enrollment expressed
as a percentage of the total population of
the fve-year age group following on from
secondary school leaving)
75.3 53.5 2008-10
average
Source: The World Bank
Entrepreneurship
conferences and
seminars are a
particular growth
area, with 82% of
entrepreneurs from
Russia pointing to an
improvement over the
last three years
9
“The PISA International Database: PISA 20909,” The OECD website, pisa2009.acer.edu.au,
accessed 19 June 2013.
79%
of entrepreneurs surveyed in
Russia cite that they believe
students need access to
specifc training to become
entrepreneurs
Public spending on education (% of GDP)
Source: The World Bank, 2010–12 average
Public spending on education and training as a % of GDP
I
n
d
o
n
e
s
i
a
F
r
a
n
c
e
A
r
g
e
n
t
i
n
a
R
u
s
s
i
a
C
h
i
n
a
J
a
p
a
n
T
u
r
k
e
y
I
n
d
i
a
S
a
u
d
i
A
r
a
b
i
a
E
U
S
o
u
t
h
A
f
r
i
c
a
B
r
a
z
i
l
U
K
U
S
M
e
x
i
c
o
S
o
u
t
h
K
o
r
e
a
C
a
n
a
d
a
A
u
s
t
r
a
l
i
a
G
e
r
m
a
n
y
I
t
a
l
y
*annotate 2010-20012 average
0
1
2
3
4
5
6
7
G20 average
4.8
8 | The power of three The power of three | 9
Impressive gains in support overall
Russia performs very well in coordinated support, topping
the G20 country rankings in this area. It is important to note
that this doesn’t mean that Russia offers the highest quality
entrepreneurial support in the G20, but that entrepreneurs in
Russia were the most likely to report an improvement in support
over the past three years.
As Darberry’s Elena Masolova highlights, there has been a
vast change in awareness and support for entrepreneurship in
Russia in recent years. “When I started out, there was virtually
nothing going on for entrepreneurs in Moscow, maybe just a few
events a month. Today the mood is much more entrepreneurial;
there are seminars and workshops and master classes: lots of
possibilities for entrepreneurs to meet with and learn from other
entrepreneurs. I believe all this is the best way for entrepreneurs
to learn. Most of this initiated by private sector but the
Government is trying to be active on this front.”
Of course, more work needs to be done to build on this progress.
As specifc priorities, Russia’s entrepreneurs would like to see
more government start-up schemes, as well as improved access to
business incubators and entrepreneur clubs and associations.
Coordinated support
Pillar ranking: 1
32%
of entrepreneurs surveyed
in Russia currently use
of have used business
incubators, compared to
the G20 average of 21%
Nevertheless, the Government has ambitious plans for Russia’s
high-tech economy. It is developing a major innovation center in
Skolkovo that will focus on IT, energy effciency, nuclear power,
biomedicine and space technology. The aim of the Skolkovo center
is to create conditions that will boost innovation.
10
Scientists,
researchers, designers and engineers will work together with
entrepreneurs to commercialize innovative new technologies.
Industrial parks are one of the most effective business
development initiatives in Russia. At the end of 2012 there were
a total of 303 such parks across the country.
11
This fgure is set
to expand considerably — 50 new projects were announced in
2012 alone. Accordingly, about one in four entrepreneurs say that
access to business incubators has greatly improved over the past
three years, even though plenty of scope for growth remains.
Access to funding equal weight score
A
r
g
e
n
t
i
n
a
U
S
U
K
R
u
s
s
i
a
F
r
a
n
c
e
T
u
r
k
e
y
M
e
x
i
c
o
I
t
a
l
y
C
h
i
n
a
C
a
n
a
d
a
A
u
s
t
r
a
l
i
a
S
o
u
t
h
A
f
r
i
c
a
J
a
p
a
n
S
o
u
t
h
K
o
r
e
a
B
r
a
z
i
l
I
n
d
o
n
e
s
i
a
I
n
d
i
a
E
U
S
a
u
d
i
A
r
a
b
i
a
G
e
r
m
a
n
y
0
1
2
3
4
5
6
7
8
Top areas where govt can accelerate access to funding in headquarter country
G20 average
5.5
Time spent on tax issues
S
a
u
d
i
A
r
a
b
i
a
B
r
a
z
i
l
A
r
g
e
n
t
i
n
a
U
S
F
r
a
n
c
e
C
a
n
a
d
a
U
K
A
u
s
t
r
a
l
i
a
M
e
x
i
c
o
C
h
i
n
a
J
a
p
a
n
I
t
a
l
y
I
n
d
o
n
e
s
i
a
R
u
s
s
i
a
I
n
d
i
a
S
o
u
t
h
K
o
r
e
a
T
u
r
k
e
y
G
e
r
m
a
n
y
E
U
S
o
u
t
h
A
f
r
i
c
a
0
500
1000
1500
2000
2500
3000
G20 average
347
*annotate as 2010-2012 average
h
o
u
r
s
Number of start-up procedures
C
a
n
a
d
a
A
r
g
e
n
t
i
n
a
C
h
i
n
a
I
t
a
l
y
E
U
S
o
u
t
h
A
f
r
i
c
a
F
r
a
n
c
e
A
u
s
t
r
a
l
i
a
B
r
a
z
i
l
I
n
d
i
a
I
n
d
o
n
e
s
i
a
S
a
u
d
i
A
r
a
b
i
a
G
e
r
m
a
n
y
R
u
s
s
i
a
J
a
p
a
n
U
S
U
K
T
u
r
k
e
y
S
o
u
t
h
K
o
r
e
a
M
e
x
i
c
o
0
2
4
6
8
10
12
14
16
G20 average
7.6
Tax incentives for investment in small business
Investment in infrastructure
Procurement (when government has to use small
entrepreneurs for a certain percentage of their tenders)
Simpli?ed, more ef?cient business regulatory systems
Promotion of a business environment that is not
overly litigated
High impact regulation & tax initiatives for the next three years
Simpli?cation of tax rules and regulations
Decrease in corporate income tax burden
on small businesses
Decrease in indirect tax rates such as payroll,
property taxes, etc.
Ease of doing business with the tax authority
Initiatives to improve long-term growth in entrepreneurship
Government start-up/other programs
Business incubators
Entrepreneur clubs and associations
Venture capital associations
Educators
Does culture encourage entrepreneurship?
Recent developments in formal and informal education
Entrepreneurship conferences
and seminars
Informal networks
Government programs
supporting entrepreneurship
43%
71%
70%
68%
64%
35%
30%
29%
21%
79%
54%
49%
45%
35%
32%
31%
30%
Partly agree, 33%
Neither agree nor disagree, 12%
Fully agree, 13%
Fully disagree, 18%
Partly disagree, 24%
0
1
2
3
4
5
6
7
Equal weight scores
Russia
Rapid-growth economies G20 average
E
d
u
c
a
t
i
o
n
a
n
d
t
r
a
i
n
i
n
g
T
a
x
a
n
d
r
e
g
u
l
a
t
i
o
n
E
n
t
r
e
p
r
e
n
e
u
r
s
h
i
p
c
u
l
t
u
r
e
A
c
c
e
s
s
t
o
f
u
n
d
i
n
g
C
o
o
r
d
i
n
a
t
e
d
s
u
p
p
o
r
t
Top initiatives and organizations that can most improve long-term
growth of entrepreneurship
Source: EY G20 Entrepreneurship Barometer 2013
23%
of local entrepreneurs say
that access to Government
start-up programs has
improved greatly in the past
three years; this is nearly
four times as many as the
G20 average
10
“Russia Hopes the Skolkovo Tech City Will Produce Its Great Leap Forward,” Tech Crunch
website, techcrunch.com, accessed 27 June 2013.
11
“Industrial parks in Russia,” EY website, ey.com, accessed 31 June 2013.
10 | The power of three The power of three | 11
Rankings table
Ranking Access to
funding
Score Entrepreneurship
culture
Score Tax and
regulation
Score Education and
training
Score Coordinated
support
Score
1 United States 7.12 United States 7.67 Saudi Arabia 6.40 France 6.58 Russia 6.23
2 United Kingdom 6.86 South Korea 7.53 Canada 6.34 Australia 6.53 Mexico 5.89
3 China 6.75 Canada 7.45 South Korea 6.34 United States 6.50 Brazil 5.87
4 Canada 6.62 Japan 7.28 United Kingdom 6.19 South Korea 6.40 Indonesia 5.84
5 Australia 6.48 Australia 7.18 South Africa 6.10 EU 6.25 India 5.76
6 South Africa 5.95 United Kingdom 7.00 Japan 6.07 United Kingdom 5.98 China 5.75
7 Japan 5.81 Germany 6.88 Germany 5.84 Germany 5.89 Turkey 5.66
8 South Korea 5.75 EU 6.07 Australia 5.75 Argentina 5.85 South Africa 5.65
9 Brazil 5.67 France 5.68 Russia 5.65 Canada 5.81 Argentina 5.64
10 Indonesia 5.53 Russia 5.05 EU 5.48 Brazil 5.78 Germany 5.53
11 India 5.48 India 4.95 Turkey 5.45 South Africa 5.67 France 5.41
12 EU 5.41 Brazil 4.88 Indonesia 5.38 Saudi Arabia 5.66 Saudi Arabia 5.39
13 Saudi Arabia 5.25 Italy 4.67 United States 5.33 Italy 5.47 EU 5.37
14 Germany 5.23 South Africa 4.33 Mexico 5.21 Russia 5.46 South Korea 5.36
15 Russia 5.04 Turkey 4.30 France 5.12 Mexico 5.32 Australia 5.31
16 France 4.74 Argentina 4.06 China 5.07 Japan 4.72 Canada 5.29
17 Turkey 4.57 Mexico 3.96 Brazil 4.83 Turkey 4.39 United Kingdom 5.19
18 Mexico 4.42 China 3.88 Italy 4.76 China 4.35 Japan 5.04
19 Italy 4.03 Indonesia 3.80 India 4.39 Indonesia 3.88 Italy 4.97
20 Argentina 3.27 Saudi Arabia 3.38 Argentina 4.31 India 3.49 United States 4.85
About the EY Entrepreneurship Barometer model
The EY G20 Entrepreneurship Barometer
2013 introduces a model for scoring countries
across the fve pillars of entrepreneurship.
12
The purpose of this model is to help identify
areas of relative strength by country and where
opportunities for improvement lie.
The model is composed of qualitative
information (from our survey of more than
1,500 entrepreneurs) and quantitative data
based upon entrepreneurial conditions across
the G20 economies. For each pillar, excluding
coordinated support, this information is
weighted 50-50 between qualitative and
quantitative inputs. For coordinated support,
given a lack of quantitative indicators, this is
based solely upon the survey responses.
The advantage of integrating both the survey
results and quantitative data is the ability to
provide an assessment of the current level and
the trends in a G20 entrepreneurial ecosystem
based upon local sentiment. To this end, offcial
statistics (for example, on the average time
taken to start a business or the tax burden)
provide a baseline for each member country.
Survey information is an important
complement to the baseline picture these
statistics provide. Entrepreneurs’ feedback on
the pace of improvement or deterioration in
conditions in their country’s entrepreneurship
ecosystem is incorporated in the model
alongside the hard statistics.
Full details of the Barometer’s methodology
can be found on page 66 in the main EY G20
Entrepreneurship Barometer 2013 report.
12
Note: As per the G20 membership, this list comprises 19 individual countries and also the European Union (EU), as an additional
member. Our rankings show the performance of each country, along with an aggregate performance for the 27 EU Member States.
10 | The power of three The power of three | 11
About EY
EY is a global leader in assurance, tax, transaction and advisory services.
The insights and quality services we deliver help build trust and confidence
in the capital markets and in economies the world over. We develop
outstanding leaders who team to deliver on our promises to all of our
stakeholders. In so doing, we play a critical role in building a better working
world for our people, for our clients and for our communities.
EY refers to the global organization, and may refer to one or more, of the
member firms of Ernst & Young Global Limited, each of which is a separate
legal entity. Ernst & Young Global Limited, a UK company limited by
guarantee, does not provide services to clients. For more information about
our organization, please visit ey.com.
About EY’s Strategic Growth Markets Network
EY’s worldwide Strategic Growth Markets Network is dedicated to serving
the changing needs of high-growth companies. For more than 30 years,
we’ve helped many of the world’s most dynamic and ambitious companies
grow into market leaders. Whether working with international mid-cap
companies or early-stage venture-backed businesses, our professionals
draw upon their extensive experience, insight and global resources to help
your business succeed. ey.com/sgm
© 2013 EYGM Limited.
All Rights Reserved.
EYG no. CY0601
ED 0715
This material has been prepared for general informational purposes only and is not intended
to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors
for specific advice.
The opinions of third parties set out in this publication are not necessarily the opinions of the global
EY organization or its member firms. Moreover, they should be viewed in the context of the time they
were expressed.
ey.com
Contacts
Alexander Ivlev
Country Managing Partner,
Russia, EY
+7 495 660 4890
[email protected]
Dmitry Neverko
Strategic Growth Markets
Leader, Commonwealth of
Independent States, EY
+7 495 755 9943
[email protected]
EY | Assurance | Tax | Transactions | Advisory
doc_161677078.pdf