2021 Entrepreneurial Activity Review

The level of entrepreneurial activity in Ireland remained high in 2021, broadly similar to 2019 levels which is when the country last participated in GEM. Despite the COVID-19 pandemic, Ireland’s TEA rate held steady at 12.5% in 2021, while its EBO rate at 6.9% also held relatively steady. The relatively high level of entrepreneurial activity remained steady at a time when the circumstances were quite different, as the arrival of COVID-19 with its associated restrictions had a profound effect on the economy and society more generally. Despite these circumstances, two indicators of confidence — the rate of respondents seeing good opportunities to start a business and the rate of respondents regarding themselves as having the skills, knowledge and experience to start a business — show an upward trend in 2021.

This sentiment also coincides with a relatively quick economic recovery from the pandemic compared to peer economies. High levels of confidence were also expressed by Irish entrepreneurs in 2021. Among TEA respondents, 60.5% saw new business opportunities as a result of the pandemic, which was second highest among GEM Level A economies. Considering that 2021 entrepreneurship activity rates in Ireland were relatively high, this suggests that at least some entrepreneurs started new businesses in reaction to pandemic-related opportunities, in addition to already-active entrepreneurs who shifted strategy and pivoted when the pandemic hit. This is further evidenced by the rate of those TEA respondents, 66.2%, who said they planned to use new digital technology to grow their business in the next six months, third highest among GEM Level A economies. Again, this — the investment entrepreneurs are willing to make to meet new customer demands — is a sign of confidence.

However, two results from the 2021 APS survey should also be noted as they could constrain longer-term entrepreneurship levels. The first is Ireland’s “fear of failure” rate — those who see good opportunities but would not start a business for fear it might fail — was 49.9% in 2021, fourth highest among GEM Level A economies. The second concerns a response from entrepreneurs themselves. Among TEA respondents, 51.8% thought it was more difficult to start a business now than in the previous year. Together, these responses may acknowledge the high degree of uncertainty and repeated lockdowns associated with COVID restrictions, even if many people can see opportunities.

2021 Framework Conditions Review

Among its peer group of GEM Level A economies, Ireland received relatively low scores on its framework conditions. On the condition of Entrepreneurial Finance, Ireland received a score of 5.0, which, while just sufficient, was 15th among GEM Level A economies, while Ease of Access to Entrepreneurial Finance received a 4.5, 16th among this group. A lack of funding options can constrain the entrepreneur who started a business with high confidence and strong intentions. Sensing this difficulty may contribute to an explanation as to why a majority of Irish TEA respondents (almost 52%) said it was more difficult to start a business in 2021.

The views of the experts consulted also indicated relatively low scores on certain other areas. For example, on the condition Government Policy: Support and Relevance, the country received a 4.4 score — 13th among GEM Level A economies. Other areas related to state support, namely Entrepreneurial Education Post-School and Physical Infrastructure, received the lowest scores among all GEM Level A economies. Government-supported programs for Irish entrepreneurs were more favourably regarded, however.