Financing Global Gazelles

6. Summary of Key Findings

6.1 Conclusions

Global gazelles represent a revolution in doing business, concurrent with the revolution in high speed global communications.

At start-up, initial capital is most often obtained through personal savings, line of credit and credit cards, much like traditional SMEs. The difference is that with gazelles, their rapid growth forces them to constantly seek hard to find new financing to sustain their growth.

Traditional banks require valuable security to be pledged against a loan. The greatest value in many global gazelle businesses is intellectual capital, which while representing true business value, is hard to quantify as collateral. At various stages of their growth, gazelles therefore have to compete with other entrepreneurs for high-priced alternative financing from angel investors and venture capitalists, or obtaining "love money" through their personal network.

Global gazelles tend to focus on industries that offer higher than normal returns to fund the high returns required from angel investors and venture capitalists. Gazelles typically operate in the IT-related business services, manufacturing "consumer goods" and software development sectors, producing higher rates of return than traditional sectors.

Global gazelle entrepreneurs have a financing disadvantage compared with traditional small to medium sized enterprises (SMEs), as the risks associated with doing business in a global market place are greater than in a domestic market.

On the other hand, global gazelles have an advantage over traditional SMEs wishing to enter foreign markets, in that they usually have experience in the markets in which they operate, and have established network connections in the foreign countries in which they trade – they are often immigrants from those countries.

Global gazelles are not just start-up companies. With competition more intense than ever, long-standing companies are creating new products and entire businesses almost instantly by using technology to seek out new markets.

6.2 Policy and program incentive recommendations

The Government of Canada and other bodies have numerous policies and program incentives that nurture the growth of global gazelles. However, the majority of our respondents in this research said that they were not aware of any of the current or planned government policies and program incentives in Canada, or in other parts of the world.

Canadian policies and program incentives in support of global gazelles would be more effective and experience greater take-up by implementing the following recommendations: