Colmena66 study shows fewer people sought entrepreneurial aid in ’21
Fewer applications were received from people seeking entrepreneurial assistance for new businesses in 2021 relative to 2020, when overwhelming job losses motivated an unprecedented number of people to develop their business idea.
Colmena66, a program of the Puerto Rico Science, Technology and Research Trust, today presented the results of the “The State of the Business Community in Puerto Rico” report, which uses quantitative and qualitative data to inform what entrepreneurs undertake as they continue to recover from the impact of the COVID-19 pandemic and face new challenges such as inflation.
When compared to 2020, in 2021 the number of referrals to resources from the Colmena66 Business Support Network increased by 10% and 19% of the established companies returned to Colmena66 to receive additional support, reflecting progress in business development of those new businesses that were born in the pandemic.
As for motivations to start a business, in 2021, the two main ones were “being my own boss, being independent or having control of my future” and “following a passion,” while in 2020 they were “I have many ideas” and “financial need.”
Only 5% of people surveyed in 2021 chose “take advantage of a business opportunity that I identified” as their main motivation. This type of entrepreneurship is the one that tends to grow faster, creates more jobs, and develops important innovations in the market, the study showed.
“Colmena66 is both a builder of the business ecosystem, as well as a force that drives the entrepreneurship pillar of the Trust, accelerating the social and economic development of Puerto Rico,” said Science Trust CEO Lucy Crespo.
“I feel very proud of the impact and metrics presented in the report. For us at the Trust, it represents a validation of the path traced with resources accessible to the entire population,” she said.
For the study, Colmena66 gathered several sectors of the business community to investigate gaps in the ecosystem so that they in turn have tools to design business support programs, write and justify proposals for competitive funds, create public policy to promote the entrepreneurship effectively, design workforce development curricula, and deploy its limited resources equitably and agilely to the sectors that need it most.
Through information captured in each counseling session and an annual survey of the 3,072 entrepreneurs served during 2021 and the more than 250 organizations and business support programs, Colmena66 answers questions such as: who are the entrepreneurs in Puerto Rico? what type of businesses we have in Puerto Rico? What impact do these businesses have in Puerto Rico? And what do we have to work on as an ecosystem?
While comparing the needs, there was a 15% increase in seeking assistance for the commercialization of innovative technologies. This can be attributed in part to the “Acercate al” Grant initiative, through which 14 selected projects supported in writing proposals for the Small Business Innovation Research (SBIR) program of the Federal Small Business Administration (SBA) with technical assistance.
In addition, there was an increase from 3% to 10% in 2021 in seeking assistance for regulatory compliance, the organization confirmed.
When inquiring about the export issue, 66% of those surveyed sell their products and services exclusively to the Puerto Rican market, but 23% of them plan to start selling in the US market next year. However, when asking about the subjects that they dominate, only 13% of the respondents indicated knowing about incentives for export.
Optimism is high, but fear of failure exists
Most of these entrepreneurs (83%) have an optimistic view of their company even though 44% of these indicate that their business is facing challenges. On the other hand, 10% worry that their business will fail and 7% do not know if they will be able to keep the business open. When inquiring about the challenges for the development of the business, 38% indicate the lack of access to capital.
Four in five respondents used their personal savings to finance their businesses, while non-recurring financing options such as the SBA’s Payment Protection Program and personal stimulus checks were used by 17% of respondents. On the other hand, only 6% of those surveyed financed their business with loans from traditional banks.
Finally, the study concludes the importance of accessibility of resources to support communities underrepresented in entrepreneurship such as the Afro-Caribbean community, the population with functional diversity, the LGBTTIQ+ community, veterans, and women.
The publication also highlights the business paths of three companies from various industries: Sirena Patterns, The Outcome Project, and Huerto Rico, as well as each support organization that provided them with technical assistance, training, mentoring and access to capital at each stage of business development.
Among the recommendations outlined, the study proposed that equitable and inclusive economic development strategies focused on entrepreneurship be promoted collectively — deeply understanding the business ecosystem to define common metrics, monitoring efforts, and disseminating data that facilitate decision making; reduce barriers to entrepreneurship, which includes increasing access to capital and business education, streamlining the permitting process and regulatory and tax compliance; and promoting a strong company culture.
“At Colmena66 we work at the intersection between economic and community development as we believe that entrepreneurs thrive when the supportive community facilitates an agile flow of talent, information and resources that help them quickly find what they need at every stage of their business development journey,” said Denisse Rodríguez-Colón, executive director of Colmena66.
“Equitable and inclusive economic development focused on entrepreneurship is the best tool to create jobs, generate generational wealth and improve the quality of life for the entire population,” she said.
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