Pain Points Medium-Sized Enterprises

Goals

To understand the pain points and unmet needs of medium businesses (50-250 employees) globally. This information will be used to create a landscape assessment.

Early Findings

Challenges in Asia

  • According to the Asian Development Bank, small and medium-sized enterprises "face major challenges in accessing cheap finance, mainly because of the asymmetric information problem between suppliers and demanders of funds and the high transaction costs. These lead to more collateral requirements for lending to SMEs with higher lending interest rates, which hinder their growth."
  • Capital market financing is not a sensible option for these enterprises because Asian countries are bank dominant countries and have underdeveloped capital markets. Approximately "70% of the Indian, 80% of the Chinese, and 90% of the Malaysian financial system consists of bank loans."
  • Banks are often cautious about lending to small and medium-sized enterprises because they find it difficult to evaluate these enterprises. What makes it challenging is that these types of enterprises often do not have solid accounting systems. Large enterprises in comparison have clearer financial statements and are audited.
  • As a result, small and medium-sized enterprises "in Asia borrow money by paying high rates of interest or offering costly collateral."
  • Half of the enterprises surveyed "(54.2%) accessed banks for finance, while just under half relied on their own capital and a quarter (25.1%) borrowed funds from family, relatives, and friends for future funding."
  • The survey further showed that small and medium-sized enterprises "desired further access to formal financial institutions, such as banks (64.5%), non-banks (33.8%), and venture capital companies (31.4%). SMEs also wished to reduce their dependence on both their own capital (20.9%) and informal individual borrowing (7.2%)."

Challenges in Africa

Summary of Findings

  • During the initial hour of research, we focused on finding pain points for medium-sized businesses globally.
  • We were able to find information on a pain point in Asia and go a bit more in-depth on this particular issue and an overview of challenges in Africa. Please note that in the different sources small and medium-sized enterprises are often grouped together possibly because they face the same challenges/have the same pain points.

Proprietary Database

  • In addition to this public search, we scanned our proprietary research database of over 1 million sources and were unable to find any specific research reports that address your goals.

Proposed next steps:

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