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Newsletter December 2013


Endeavor: Entrepreneurship and Investment Opportunities in Greece

Endeavor Greece released a study highlighting the potential Greece offers to both entrepreneurs and investors as the economy begins to emerge from recession.

Endeavor, an international non-profit organisation, promotes entrepreneurship and is supported by leading business leaders and investors from around the world. Endeavor Greece was launched in September 2012, and is supported by Greek companies with an interest to promote growth and development via entrepreneurship.

The study focuses is on the ‘entrepreneurial boom’ in Greece in the last five years, providing a critical review of the entrepreneurial shift and extent to which the discourse about entrepreneurship has translated into a successful, new growth model.

The study revealed that 42,347 new businesses were launched in 2012, 90% of which were in the sectors of construction, apparel and footwear, real estate, accounting, consulting, and food services (compared to 93% in 2008).

In 2012-2013, despite the radical drop in disposable income, as well as a dearth of investment in public infrastructure and residential/commercial buildings, the mix of new businesses is following a similar growth logic. In sum, 93% of ventures that were launched in Greece in 2008 focused on lower value-adding sectors; by 2012, this -figure was still around 90%.

A substantial portion of new business creation in Greece focused on what is referred to as the non-productive sector, or those offering limited potential for added employment or export. Such businesses include restaurants, cafes, bars, and other retail establishments focused, for instance, on the more traditional areas of apparel and similar goods.

In light of this, the areas that should be pursued are those that offer a wider scope for regional or global expansion, either as export products or as online services, apps, or products that can serve and reach global markets.

Endeavor assessed the perspective of organisations that have been established to serve as potential investors, mentors, supporters or entrepreneurs. Their responses generated four main conclusions:
1. Issues with overall quality rather than quantity of ventures.
2. Entrepreneurs are praised for their commitment, aspiration and strong academic background; weaknesses are observed mainly with regard to limited business experience, ability to execute, and general openness to feedback.
3. Business ideas and ventures are praised for their innovation, but there are issues related to the clarity/focus of the underlying business plan, the monetisation model and the future competitiveness of the assessed ventures.
4. Support should primarily focus on business plan fi¬ne tuning, networking at an international rather than on a local level, and ongoing support and guidance to help achieve strategic aspirations.

The report showcases business that have adopted a new business model based on ambition, long-term goals and strategies, businesses capable of creating growth by providing products and services with a high value added, as well as generating jobs. These businesses are in Information and Communications Technology (ICT), with 1,185 new companies opened in 2012, along with enterprises involved in tourism, food production and processing, and high-tech development such as nanotechnology and biotechnology.

In response to the attractiveness of entrepreneurship in Greece, more than 55 institutions have recently been set up in the country, either as local subsidiaries of international organisations, such as Endeavor Greece, or as domestically developed schemes, to promote entrepreneurship. Just three years ago, 95% of them were non-existent, demonstrating the growing power of entrepreneurship as a trend.

High-impact entrepreneurs in Greece and investors with interest in Greek market pursue four types of business opportunities:
1. Opportunities in areas in which Greece possesses competitive advantage, such as tourism and travel, that are still underutilised
2. Opportunities in sectors undergoing a broad restructuring, for instance fi¬nancial services and energy, allowing for market share to move among existing players or to new players, typically through consolidation
3. Opportunities driven by global trends, for instance in ICT, which can be captured by Greek entrepreneurs at local, regional or global levels
4.  Sector-agnostic opportunities in individual companies whose potential can be maximised if they address their current liquidity issues and/or go through operational and organisational restructuring

Each of these broad opportunities reflects eight sectors:
Tourism: Greece could benefit from services that help tourists enjoy a more complete experience, for instance through organised themed trips and through devices and applications enhancing the travel experience, such as for museums and historical monuments.

Food & Agriculture: Opportunities exist in the consolidation of the olive oil market, creating products designed for special diets (such as gluten-free foods), growing herbs and nuts, and the large-scale cultivation of products such as tomatoes, with a market focus on major organic markets such as Germany, Austria and the Scandinavian countries.

Energy & Green Technologies: Waste management, consolidation of wind parks and high-tech energy storage devices are some areas that offer growth potential.

Information and Communications Technology (ICT): Areas include marketing and advertising via mobile phone services, technological solutions for traditional sectors such as tourism, shipping and agriculture, business-to-business and business-to-consumer communication development, electronic games and 3D printing.

Financial Services: Especially attractive are online insurance services and mobile phone payments.

Health: The health sector offers potential in research and development of generic drugs, clinical trials and mobile phone solutions.

Biotechnology & Nanotechnology: This fast-growing area could focus on research and development of commercial products.

Commerce: Commerce in general offers growth opportunities in developing online tools for price and markets comparisons, and developing a shopping experience that will combine the consumer’s online and physical presence at bricks and mortar stores.

The Golden Window
Within the framework of these emerging opportunities, the study points out the current “golden window for entrepreneurial activity in Greece, as the country goes through a period of total restructuring, and local players start competing at a regional and global level.”

For potential investors this golden window means that the low-cost opportunities in the Greek market often outweigh the risks, barriers to entry, and the slower uptake to create a more business-friendly environment. This golden window will most likely have a duration of 12-24 months, providing an immediate impetus for new business creation, new investment, and new growth.

Readers may access the full report here.