The young people I meet often ask what they should study in university: Should they pursue a business degree, or something else? I always tell them to pursue what interests them. But I’d also recommend that they look ahead to what’s next, after graduation. What support is available for young people who have the drive to become entrepreneurs?
Funding is often the greatest obstacle. When my friends and I launched Student magazine in the late 1960s, I managed to sell some ads, and that paid for the first few issues. But as the magazine caught on and we needed to pay the printers and other expenses, cash became even tighter. That’s when my mother stepped in. Months before, she had found a bracelet and turned it over to the police. No one claimed it, and around the time that my friends and I were starting to get a bit desperate, the police gave the bracelet back to her. She sold it and gave that £300 to our venture. That was all it took to keep us going, and we went on to set up a mail-order record business, record stores and recording studio in the next few years.
Young entrepreneurs can face especially high hurdles when approaching investors or applying for loans: they usually have few assets, no credit history, and rarely any business experience that they can point to. This is a problem that needs solving—after all, a sign of a healthy economy is a thriving small-business and startup sector—and established entrepreneurs need to show leadership here.
To try to pinpoint what prevented young people from setting up businesses, one of our Virgin companies conducted a survey of young entrepreneurs in 2011, and the responses revealed the usual issues: young people were still held back by a lack of support, a lack of practical training and above all a scarcity of funds.
Drawing on these findings and working with a number of youth-issues experts and groups, we issued a report calling for corporations to find tangible ways to support startups, such as opening up office space and providing mentors for aspiring entrepreneurs. It also suggested that government should reconsider the way it invests in young people.
The argument was simple: Why should a university student be able to borrow around £30,000 to get a degree in business but then struggle to raise £5,000 to launch a startup? We suggested that the British government could unlock huge economic benefits by renaming and remodeling its Student Loans Co. The new Youth Investment Co. could continue to administer student loans, but also make loans available to young entrepreneurs on the same favourable terms.
Around the time that report was published, the British government was already looking at various schemes to provide financing to young business people, and I had been doing what I could to urge lawmakers to consider such proposals seriously. In 2012 the government formed a new non-profit called the Start Up Loans Co., to provide financing to new businesses. To date, more than 9,000 businesses have borrowed over £45 million. Through our bank Virgin Money we took part in a pilot program last year, and are now launching our own delivery partner, Virgin StartUps, to help provide training and mentorship, as well as money.
This idea should have merit beyond Britain—and we should all be urging lawmakers to implement similar schemes. Funding startups is a huge challenge, and the solution requires the involvement of both the public and private sectors.
Clearing a path to entrepreneurship for our best and brightest benefits everyone and boosts the economy, so if you are an experienced business leader, consider volunteering as a mentor or offering some of your business’s resources to young people trying to launch startups.
And if you are a young entrepreneur, what is your biggest challenge? A lack of financing? Difficulty building your business network? A combination of both? Do you think a loan program for young entrepreneurs could work where you live?
Richard Branson is a philanthropist, adventurer, entrepreneur and founder of the Virgin Group of companies