Publication
UK Business Creation Process for Ethnic Minorities: Panel Study of Entrepreneurial Dynamics 2023-25
Published: 15 October 2026
ERC Research Report
Associated Themes
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Diversity -
Entrepreneurship -
Global Entrepreneurship Monitor ( GEM )
The Panel Study of Entrepreneurial Dynamics (PSED) 2023-25 examines the complex process of business creation in the UK, specifically highlighting the experiences of ethnic minority entrepreneurs. By tracking a cohort of nascent business owners, identified from the Global Entrepreneurship Monitor (GEM) Annual Population Surveys over two years, the research identifies that individuals from diverse backgrounds often display higher initial interest in starting ventures but face significant structural and financial hurdles.
The findings show that non-white entrepreneurs and women experience higher dropout rates, frequently due to funding shortages, personal time constraints, or the pursuit of more stable employment. Additionally, the data suggests that while immigrants and regional migrants are highly active in the start-up space, their progress is often stalled by market competition and a lack of formal support. Ultimately, the report advocates for policy reforms that improve access to seed-stage financing and mentorship to better support these underrepresented groups.
| Key Findings at a Glance |
| The analysis of the PSED Wave 1 and 2 surveys has revealed different experiences for Ethnic Minority Backgrounds (EMB) nascent entrepreneurs compared to the wider population in the first 24 months of starting their new business venture. These can be summarized as follows: |
| • Dropout rates are higher for non-white ethnicities and, indeed the same can be said for women. |
| • Lack of funding is a major challenge for these fledgling nascent entrepreneurs – a common theme often cited EMBs. |
| • For one in four of nascent entrepreneurs getting employment is the reason why they abandoned their venture which indicates that their nascent business was necessity driven – especially for EMBs. |
| • Even though 71% of the nascent entrepreneurs think starting a business is relatively easy, it appears to quickly become too much to do alongside their other priorities.
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