Company Insolvencies at 32-year Low Thanks to Covid Loans

May 5, 2021

In Q1 of 2021, statistics report that company insolvencies in England and Wales were at their lowest level in over 30 minutes. Thanks to government support during the coronavirus pandemic, companies were able to stay afloat.

Britain was set for disaster in 2020, suffering its sharpest drop in economic output in over three centuries; however, thanks to more than £75 billion in government loans, companies were able to avoid bankruptcy and stay financially stable.

The number of businesses declared as insolvent in the first quarter of 2021 was 2,384, down from 3,053 in the final quarter of 2020. These numbers are the lowest reported since Q1 of 2011.

How Many Insolvencies Are There Annually in the UK?

In 2020, there were 111,424 reported individual insolvencies, down 9% year-on-year from 2019. Of this, the largest proportion came from individual voluntary arrangements (IVAs) (78,478).

The rest was made up of debt relief orders (DROs) (20,321) and bankruptcies (12,625). The DROs and bankruptcies were the lowest they had been for 11 years and 30 years, respectively.

In a typical year, there is an average of between 15,000 and 17,000 bankruptcies annually. For DROs, this figure is around 24,000 and 28,000 per year. IVAs, on the other hand, have been increasingly steady year-on-year by around 10-20%; this time, there was only an increase of 1%.

Government Schemes: Furlough and Bounce Back Loans

The UK government has been the key player in this initiative, providing a much needed lifeline for thousands of companies.

Thousands have relied on the furlough scheme over the past year, the scheme which has been supplementing 80% of workers’ wages whilst they are unable to work. With the government paying up to £2,500 monthly per worker, companies have saved thousands over the last year.

HMRC statistics show that at the peak of the furlough scheme, there were 8.9 million employments furloughed. The furlough scheme has already been extended until the end of September 2021 but from July 2021 will start to contribute towards the cost proportionally.

Bounce Back Loans

Another government-funded scheme that has saved thousands from bankruptcy is the Bounce Back Loan Scheme (BBLS). This scheme was designed to give companies quick access to funds with a year interest-free. A lender could offer a six-year term loan from £2,000 up to a quarter of a business’ turnover.

During the coronavirus pandemic, the BBLS supported thousands of UK-based businesses whose cashflow was being negatively disrupted as a result of the coronavirus pandemic. Offering up to £50,000 in finance, the scheme promised next day payments and loans with a year of zero interest.

Around 1.4 million businesses took out Bounce Back Loans, representing a £45 billion bail out from the UK government.

Repayment of Bounce Back Loans

Now, the bounce back loans are due for repayment although given the current circumstances, there are still many companies who are unable to pay. However, the government has offered flexible repayment.

Those who borrowed Bounce Back Loans will now have the option to adjust their repayments based on the circumstances of the company. The chancellor has already offered the option of an additional six months for repayments.

In addition to the six-month window, a ‘Pay as You Grow’ scheme has been introduced and is available for over 1.4 million businesses. Through this, companies can pause repayments, delay their payments until 18 months after they take out the loan or extend the length of their loans from six to ten years.

David Beard of leading price comparison website, Lending Expert commented:

“I imagine the UK banks would have realised that around 10-20% of customers were going to have trouble repaying. This is very common across all types of loans even when you have carried out sufficient credit and affordability checks.”

“We cannot ignore that covid has been very challenging for a lot of businesses, specifically in retail, hotels, leisure and hospitality, and unfortunately not even loan amounts of £50,000 will be sufficient to maintain a healthy cash flow.”

“However, millions of companies would have benefitted from the initial injection in cash which would have helped to pay their suppliers and employees and we cannot deny the short term benefits that this may have had on the economy. And now with covid restrictions easing, the economy is going to see a recovery, so repayment rates should be strong, even if some take a little longer to repay than others.”

Other Companies Saved from Bankruptcy

In summer 2020, the Bank of England (BoE) also released a list of companies who had benefited from its Coronavirus Corporate Financing Facility (CCFF). The 53 companies collectively received over £16 billion of loans, with extremely low rates.

The loans were available for large companies who were, prior to the coronavirus pandemic, financially healthy but who were suffering due to the situation. Although the scheme was funded by the Bank of England, companies outside of the UK were also eligible.

All sectors benefited from these loans but some of the largest beneficiaries were, unsurprisingly, from the aviation, automotive and retail sectors. Big names include Westfield shopping mall owner, EasyJet and Nissan who all received bailouts of £600 million courtesy of the scheme.

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An Investors Guide On How to Apply for an EU Citizenship

May 5, 2021

Have You Been Looking For The Right European Country To Relocate & Invest In?

If you’ve been looking for a sign to invest in a foreign country – here it is. Small European countries like Portugal, Greece, and Austria are booming right now. Their economies are at an all-time high and they are constantly welcoming foreign investors.

Luckily, for you, this makes it quite easy to obtain a Visa and then potentially citizenship. Through established programs, you’ll be able to invest in the industry of your dreams and be allowed to take your spouse and dependants alongside you.

Here are the easiest ways to make that happen.

Apply for a European Golden Visa

A European Golden Visa is a Visa that allows individuals looking to invest in European countries the chance at a residency. This is done to encourage individuals to invest in foreign countries as it helps the economy’s growth quite substantially. These investments can be in anything from businesses to rental properties.

There are a variety of European countries that offer the Golden Visa including Spain, Portugal Golden Visa, Greece, Italy, Malta, Switzerland, Austria, and Belgium. This Golden Visa also extends to any dependants and spouses attached to the investor, making it extremely easy to relocate your entire family and fully commit.

However, you can obtain a Golden Visa without actually intending to live in a European country as well. It is important to check the specific requirements each country has when it comes to investment in tandem with the Golden Visa. It varies from location to location.

You might be asking what are the requirements for obtaining a Golden Visa. While there aren’t many, there are some superficial limitations to the process. Here are the requirements you should assure you meet before applying:

You have proof of the finances you intend to invest and all money was obtained in a legal fashion
A clean criminal record
You can prove the wealth or a steady income that will support you and/or your family members during the duration of the Visa.

Certain countries all require a certain amount of money to be invested into their economy in exchange for the Visa. This could be a one-time investment or a more long-term investment plan.

Realistically, applying for a Visa means at some point you’ll probably be looking for residency and citizenship. So, can a Golden Visa get you an EU citizenship through investment maybe? In short, the answer is yes, but it doesn’t happen immediately. There are some requirements to officially obtaining it.

First, you’ll have to qualified for Permanent Residency. This happens after five years of living in the EU with your Golden Visa. Details will depend on the country you reside it but as a general rule pf thumb, this residency can be renewed as needed. Some countries don’t have these requirements at all! You can just straight away apply for residency.

Following your permanent residency, after another five years – so a total of ten years living in the EU – you’ll be able to apply for citizenship. However, Citizenship isn’t guaranteed and is much more restrictive in comparison to being approved for the Golden Visa and permanent residency. This is due to the varying requirements in each independent country. It’s important to seek the right professional to help give you the greatest chance possible at obtaining citizenship.

Greece however, is a country that will give you citizenship with the only requirement being you have to live there for a certain period of time.

Start-up Visa

There is also the option of opting for a Start-Up Visa instead. These are aimed at people not only looking to invest in a European country but to actually build their own company. So if you feel like you have an entrepreneurial bone in your body, this could be the way to go.

Europe is very open to welcoming anyone who is willing to bring new innovative business and company ideas to their country as it allows for major expansion and economical growth. This start-up Visa will only offer you residency, but once you have residency, as discussed above it is easier to upgrade that status to citizenship.

Popular European countries that offer this include Sweden, Austria, and France. Open a business next to the Eiffel Tower! Life doesn’t get much better than that. Again these countries all have different standards and requirements for acquiring the Visa but all in all the process is fairly simple and has a high success rate. Like the Golden Visa, this Visa also supports and dependants and spouses you have as well.

Some requirement includes:

Proof of funds large enough to support you
Skills, and/or education, and experience to run a business
Partners willing to sign alongside you

Family Lineage

Your parents or grandparents might just be the key to getting you European Citizenship. If your family lineage hails from a European country you will most likely be able to apply for dual citizenship.

This would require you to obtain proof, most likely in the form of a birth certificate. You would then have to get in contact with the countries embassy where you live, and they will handle the rest. The official news of Citizenship can take few months, and depending on the country will cost you a small fee.

This can also work if your spouse obtains EU citizenship. Depending on where in the EU you may also be able to apply for citizenship along with your children. This is probably the easiest and quickest means for an investor looking for EU Citizenship, however, it isn’t always applicable in each individual’s situation.

Overall, there are many ways you as an investor can obtain EU Citizenship. With many of their countries steadily growing and becoming some of the most desired locations around the globe, now is the time to act. Whether you’re looking to invest in rental properties or a new business, there are many countries that even rival the quality of life that North America and Australia possess. The versatility in the EU endless. Happy Investing!

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6 Things That Make Your Business More Attractive to Investors

May 5, 2021

The initial stages of starting your own venture are undeniably challenging. It begins with developing a top-notch product that fulfils people’s needs. Then comes the product launch and the pitch that convinces people of its worth. However, a common problem with startups and new businesses is that most don’t realize that this is just the beginning.

Many startups reach this stage on to come to a stand-still. They focus so much energy on their product that they fail to connect with their consumers. The result? A majority of startups fail to scale up. You likely already know that investors can go a long way in helping a business grow. But how do you attract these crucial investors?

6 Ways to Attract Business Investors

A solid idea may be enough to make investors curious. However, it may not be enough to get them to stay. Follow these six steps from Ibrahim Issaoui, a prominent business leader in the DRC with a proven track record spanning multiple industries, to get investors on board and keep them around.

1. Know Your Business Best

There’s more to knowing your business than being an expert on your product or service. Here are some other aspects you should be aware of when it comes to your market:

Markets size
Demographics
Age brackets
Group preferences
Your top competition

As a business leader, your knowledge of your industry, target market, recent trends, and growth possibilities should be second to none. This understanding shows that you have a clear vision for your business, which is instantly attractive to investors.

2. Have a Compliance Strategy

It’s never been more important for businesses to be on top of their compliance commitments. There are Government rules and regulations affecting just about every aspect of business, from privacy to health and safety. Furthermore, these regulations change all the time, so it is important to make efforts to stay on top of the latest developments.

Working with a professional consultant like phscompliance.co.uk can help to make sure you meet your compliance requirements and adapt your strategies as necessary. This will make your business more attractive to investors as it will minimize the risks associated with investing in your business.

3. Minimize Direct Costs as Much as Possible

The direct costs of your business include the cost of production, in other words, any purchase that contributes to your product’s final price. Say you’re selling tee shirts for $20. If you spent $16 for the purchase, packaging, and transport of each product, this would be your direct cost. The remaining $4 is your profit.

Now, let’s talk about how reducing your direct cost to the bare minimum helps to attract investors. For one, you gain a profit of at least 30% per sale, which will grab investors’ attention. After all, low direct costs and high-profit margins are a sign of high yields to come.

4. Keep Well-Audited Accounts

Before talking to an investor, make sure to audit and prepare your accounts for at least the last three years. This will make an investor more confident in you and your business. This information is useful to investors in more ways than one. They can determine your company’s financial position, profit potential, as well as its projected growth. This is instrumental in securing investments from equity investors, banks, venture capitalists, and many other financial institutions.

Additionally, make sure your business is debt-free. Investors want to support your venture but they don’t want to pay off your debts. So if you want investors to fund your business, ensure you have no outstanding debts or payments. That way, they’ll be sure that the company is putting their investment to good use.

5. Achieve Your Business Goals or Exceed Them

Investors want to know about your business goals as a priority. At the same time, they want to know about the objectives you’ve already achieved. Apart from that, they want to know of the milestones you failed to achieve and why.

A history of accomplished goals boosts your investors’ confidence. It assures them that they’re working with a team of go-getters that is equipped to work towards every goal they set.

6. Study Potential Investors

Finally, take some time to research the investors you want to approach. Remember that every investor has individual preferences. Think of it like this: you reach out to an investor interested in the energy industry. However, you’re a tech entrepreneur. The chances of this particular investor being interested in your company are pretty slim.

Now, this is a golden rule that applies to every industry. Of course, there are examples of investors funding a company in an industry they previously had no interest in. However, these are few and far between. Investors may even have preferences in founder types. They may prefer a business owner to be a particular age, have a certain level of education, experience, or more.

Wrapping Up

The key takeaway here is preparation, preparation, preparation! Don’t rush to on board the first investors you meet. If you and your investors turn out to be incompatible in the long run, it will simply harm your business. Patience is key!

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Commercial Work Vehicles: Top Benefits Of Renting Your Fleet

May 5, 2021

If you have a business that requires you to haul materials on the job, you know not to underestimate the impact a good fleet of work trucks can have on your overall productivity. If you’re an experienced construction worker or landscaper in the need of a commercial work vehicle for a new project, you are likely wondering: should I rent or buy?

Your parents and grandparents have likely instilled in you the importance of owning over renting, whether you’re considering buying a new home or another asset like a car. However, when it comes to your business, you have to consider that owning may not be the best option for some of the projects you’ll take on.

There are many factors to consider in the decision to rent or buy, such as the time constraints, budget for a given project, and financial state of your business. If you are in the market for a new commercial work vehicle or interested in obtaining a fleet of trucks for an upcoming project, let’s discuss why renting has the potential to be the best choice for you and your business.

Renting Allows For Flexibility

Do you need a fleet of flatbed trucks for a short-term project, but don’t want to break the bank buying expensive vehicles that you won’t be regularly using? Consider renting your fleet to maximize flexibility.

When you choose to rent your commercial work trucks, you will be able to use the vehicles you want when you want them, maintaining the flexibility you desire for each given project. If you want to maximize flexibility while minimizing concerns like storage issues, maintenance, or upkeep of purchased vehicles, renting may be the best option for you.

Renting Can Save You Money

If your business is tight on funds at the moment or has a need for immediate cash flow, renting a fleet can be a financially sound option for your project. Owning your own fleet can be a valuable asset to your business, but if you’re looking to save money and simplify a short-term project, renting may be the right choice for you.

New car prices are soaring due to the pandemic. The average price of a new car has increased over 8% in the past year, and car lots are experiencing a shortage of both new and used vehicles. Wholesale used car prices are as high as they’ve ever been, up nearly 30%. If you are serious about saving money in 2021, it might be in your best interest to rent until car manufacturing has stabilized.

Renting Allows You To Customize Your Needs

Are you looking to rent a single truck for a 4-month project, or 20 trucks for a year-long project? When you work with a qualified truck rental company, you can customize your needs on a project-by-project basis to ensure the job gets done right.

For example, this year Bruce invested in purchasing 2 trucks for the long-term benefit of his business. For his new short-term project, he will need 3 more trucks. Rather than spending upwards of $100,000 on extra trucks that his business doesn’t yet have regular use for, Bruce partnered with a truck rental company that created a custom rental plan based on his needs, spending a fraction of the cost in the process.

Conclusion

If you regularly haul goods and materials on the job and are in the market for a new commercial work vehicle, it can be stressful to know whether to rent for maximum flexibility or buy for long-term investment. What’s best for you is entirely based on the needs of your business, the length of the project at hand, and your personal preference.

When you choose to rent your fleet instead of buy, you can maintain flexibility, save money on short-term jobs and customize the needs of your company on a project-by-project basis. Consider contacting a professional truck rental company to get a free quote and discuss customizing your options.

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A Beginner’s Guide – Finding the Best Trading Platform

May 4, 2021

When it comes to exploring the world of trading possibilities, the most important thing that you need to establish is the actual approach that you are going to take. This notion had the power to determine the overall success of your experience, however, the first thing you need to do is tackle the actual trading process to reach those points in the trading journey. With all of this in mind, you might wonder what that approach is that you will have to take so that you can achieve all of the trading goals that you have. Here, you will have to determine the actual trading experience and trading knowledge that you have, so if your find yourself on the beginner side of the trading concept, then this article is the perfect start for you.

Once you establish the basic notion that the concept of the trading possibilities, you will get a chance to see that they can be used in a way to help people deal with money over the internet, you will get a chance to further narrow things down and choose a specific trading segment that you would like to focus on. Understanding all of this, the concept of these innovative trading possibilities will give you a chance to exchange them for profit. The actual abundance of possibilities will give you the perfect kick-start of your trading journey, thus help you take the most effective and efficient trading approach possible. Here, if you continue reading through this article, you will get a chance to look through some of the best trading platforms, thus find the one that is best suited for you.

Set Up Your Trading Goals

One of the most important things that you have to establish when it comes to finding the best-suited trading platform is the actual plan that you want to accomplish. This plan often consists of numerous goals that you as a future trader want to achieve. To construct the perfect trading concept, thus take the approach of finding the best trading platform you will have to take into consideration the actual trading knowledge that you have thus far, as well as the digital value that you would like to focus on.

These two things will help you determine the next big stage of your trading experience, thus help you create the actual trading goals that you would like to achieve. All of this will give you the necessary guidelines that will help you find you significant trading platform.

Take a Look at the Reviews

With the completion of the above-discussed segment, you will move on to the next big step of your trading experience, which will help you find the Best Trading Platform. Here, we are talking about taking a look at the variety of reviews that other users have to share regarding the trading platforms that you consider exploring. This concept is one of the most interesting ones as it will give you a chance to expand your personal view regarding the concept, thus give you a chance to read all about the variety of different options that other trading users have been a part of.

Taking this segment into consideration when you are searching for the best trading platform will help you establish a rather firm foundation that will ultimately lead you to achieve all of the points of the trading success.

Explore all of the Additional Trading Features

Once you have completed all of the things that we have discussed above, you will get a chance to explore all of the additional trading features that you will have to take into consideration. When you are in the process of finding the best trading platforms, you will have to think about the overall regulation, the tradable assets, all of the fees, including the commission, the trading spreads, and so much more.

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Workplace Integration and Gender Attitudes

May 4, 2021

By Gordon B. Dahl, Andreas Kotsadam and Dan-Olof Rooth

Women make up close to half of the labor force in most developed countries, yet occupational segregation remains high (Blau et al. 2013). There are several possible explanations for the lack of workplace integration, including different preferences of men versus women (Goldin 2014). But it is also possible that workplace segregation is caused by gender stereotypes which cause belief distortions about whether a woman can fit into a traditionally male-dominated environment (Bordalo et al. 2016). Related to this explanation, gender role attitudes have been shown to strongly correlate with female employment rates and the gender wage gap across countries (Fortin 2005).

Understanding the link between gender attitudes and occupational segregation is a critical input into policies which have the goal to integrate men and women in the workplace. Contact theory posits that biases and beliefs of a dominant group can be changed via intensive exposure to members of a minority group (Allport 1954). The argument is that mixing groups can break down stereotypes and promote understanding. There have been several studies which have randomly assigned college roommates of an opposite race or ethnicity to study the predictions of contact theory (e.g., Boisjoly et al. 2016, Carrell, Hoekstra and West 2015, Finseraas and Kotsadam 2017). However, until recently, there had not been similar field experiments which assigned men and women to work and live together to see whether gender attitudes and real-world outcomes could change.

A field experiment during army boot camp

In recent work (Dahl et al. 2021), we explore whether integration can change gender attitudes and related outcomes. We conducted a field experiment which randomly assigned women to teams which were traditionally all male. Our setting is the Norwegian military, which has only 15% women in its ranks, a fraction which is similar in the United States. The Norwegian Army’s North Brigade has been at the forefront of integration and since 2010 all of its battalions have had mixed-gender squads. With the help of the Norwegian Defense Research Establishment, in 2014 we randomized female Army recruits to some squads but not others during boot camp.

Boot camp, also known as basic training, lasts for eight weeks. It is an intense period of training which involves both field exercises and classroom time. The objective is to prepare soldiers physically and mentally for military service. Recruits are grouped into squads, which are typically composed of six soldiers. These squads train together as a team and live in the same room. Since recruits are not allowed to leave base during boot camp, they spend most of their daytime and nighttime hours together.

In our setting, treated men live and work closely with women in their squad (usually two women and four men), while untreated male recruits will only have other men in their squad (usually six men).

We conducted surveys of gender attitudes before boot camp, at the end of boot camp, and 6 months after boot camp. We also tracked the military occupations of soldiers after boot camp and the education and occupational choices made after the end of service.

Short run changes in attitudes and occupations

We find that intensive contact with female recruits during boot camp causes men to have more egalitarian attitudes in the short run. At the end of boot camp, treated men are 14 percentage points more likely to think mixed-gender teams perform as well or better than same-gender teams. This is a 26% increase relative to the control mean of 52%. Treated men are also 8 percentage points more likely to believe men and women should share household work equally, relative to the control mean of 66%. And finally, treated men are 14 percentage points more likely to not completely disavow feminine traits, relative to the control mean of 63%. These changes are equal to between one-third and one-half of the gap in mean attitudes across genders.

These are sizable changes in attitudes, but do they translate into differences in real outcomes? To examine this question, we look at the gender makeup of military occupations after boot camp ends. We find that men in mixed-gender teams during boot camp go on to serve in military occupations with more women in them: there is a 22% higher fraction of women in the occupations of treated men relative to the controls. Since assignments are based on soldier preferences, ability, and staffing needs, we interpret this result as at least in part reflecting the altered preferences of recruits.

Longer run effects

A natural question is whether the short-run changes in gender attitudes and occupational choices persist. After boot camp ends, individuals are assigned to new squads whose members serve in a variety of military occupations. An important consequence of the reshuffling is that both the extent of exposure – in terms of number of women – as well as the intensity of exposure – in terms of teambuilding and spending time together – is typically lower after bootcamp. We find that treated men’s gender attitudes converge to those of the controls, eliminating the short-run differences observed at the end of boot camp. Congruent with this result, we find no difference in future education or occupation choices in the long run: treated men do not choose fields of study or occupations with a larger fraction of women in them.

We caution that these results do not mean that integration cannot change attitudes and choices in the longer run. Instead, the sharp contrast between the short and long run results suggests that to maintain changed attitudes and behaviors, exposure likely needs to be maintained for a longer period. Our intervention, while intense during boot camp, was relatively short compared to the overall military experience. And our setting is an extreme example of a male-dominated environment, where attitudes may be the most difficult to change permanently without continuing exposure.

Will integrating women hurt the military?

Our research provides general insights into how integration can matter for attitudes and occupational choices. However, it also has direct implications for the integration of women into the military. We also studied how treatment affects male soldiers’ performance and satisfaction with service. We find no evidence that integration hurt squad members on these two margins, either during boot camp or subsequent service. Treatment also did not affect real outcomes: there was no effect on promotion probabilities or performance evaluations conducted at the end of service. Policymakers in several countries have argued that having women serve alongside men in the military would hurt performance and cause dissatisfaction among male recruits, but this evidence suggests otherwise.

Note: This article originally appeared in VoxEU and is based on research appearing in Dahl et al. 2021.

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About the Authors

Gordon B. Dahl is a Professor of Economics at the University of California, San Diego. He is also an Affiliated Professor at the Norwegian School of Economics, the Area Director for Labor Economics for the CESifo Research Network, a Research Associate of the National Bureau of Economic Research, a Research Professor at the ifo Institue, a CESifo Research Fellow, a Research Fellow of the Institute for the Study of Labor (IZA), and a Fellow of the Stanford Center for the Study of Poverty and Inequality. He was previously a faculty member at the University of Rochester and has held visiting positions at UC Berkeley, Princeton University, University of Copenhagen, University of Stockholm, University College London, Norwegian School of Economics, and CESifo Munich. He received his Ph.D. from Princeton University in 1998 and his B.A. from Brigham Young University in 1993.

Andreas Kotsadam is a Senior researcher at The Frisch Centre, Professor at the Psychology Department at University of Oslo, and affiliated with EGAP and CESifo. Kotsadam’s main research interests are behavioral economics, development issues, and inequality.

Dan-Olof Rooth is a Professor of Labor Economics at the Swedish Institute for Social Research, Stockholm University. He received his PhD in Economics from Lund University in 1999. His main research interests are labor economics with a focus on education, economic psychology, discrimination, and health.

References

Allport, Gordon W., The Nature of Prejudice (Reading: Addison-Wesley, 1954).
Blau, Francine D, Brummund, Peter, and Liu, Albert Yung-Hsu, “Trends in Occupational Segregation by Gender 1970-2009: Adjusting for the Impact of Changes in the Occupational Coding System”, Demography 50, 2 (2013), pp. 471-492.
Boisjoly, Johanne, Duncan, Greg J., Kremer, Michael, Levy, Dan M., and Eccles, Jacque, “Empathy or antipathy? The impact of diversity”, American Economic Review 96, 5 (2006), pp. 1890–1905.
Bordalo, Pedro, Coffman, Katherine, Gennaioli, Nicola, and Shleifer, Andrei, “Stereotypes”, The Quarterly Journal of Economics 131, 4 (2016), pp. 1753-1794.
Carrell, Scott E., Hoekstra, Mark, and West, James E., “The Impact of Intergroup Contact on Racial Attitudes and Revealed Preferences”, National Bureau of Economic Research Working Paper No. 20940 (2015).
Dahl, Gordon B., Kotsadam, Andreas, and Rooth, Dan-Olof, “Does Integration Change Gender Attitudes? The Effect of Randomly Assigning Women to Traditionally Male Teams”, Quarterly Journal of Economics, 136, 2 (2021), pp. 987-1030.
Finseraas, Henning and Kotsadam, Andreas, “Does personal contact with ethnic minorities affect anti-immigrant sentiments? Evidence from a field experiment”, European Journal of Political Research (2017).
Fortin, Nicole M, “Gender role attitudes and the labour-market outcomes of women across OECD countries”, Oxford Review of Economic Policy 21, 3 (2005), pp. 416-438.
Goldin, Claudia, “A grand gender convergence: Its last chapter”, The American Economic Review 104, 4 (2014), pp. 1091-1119.

U.S. Interest Rates are on a Gradually Buoyant Trend

May 4, 2021

By Chan Kung and Wei Hongxu

Since February this year, U.S. 10-year Treasury yield has been rising steadily. The yield broke through the 1.6% mark again on March 12, rising to 1.625%, after U.S. President Joe Biden signed into law a new USD 1.9 trillion stimulus package. Compared with 0.916% at the end of last year, the yield on the 10-year Treasury note has now risen by 0.7 percentage points. Judging from this rising yield, the trend toward higher interest rates in the U.S. is likely to remain for some time to come. The global monetary environment of zero/negative interest rates since last year is undergoing a change, which is bound to bring about a repricing and structural impact on the global capital market.

In view of the fundamentals of the rising U.S. Treasury yields, ANBOUND has mentioned that, on the one hand, the consequences of the Fed’s ultra-loose monetary policy last year are emerging and the U.S. economic recovery prospects are relatively optimistic. On the other hand, inflation expectations caused by the new round of stimulus in the U.S. are clearly rising, at the same time, the Fed’s potential for a stronger yield curve control policy is also leading interest rates higher. Judging from the performance of the market, investors are not panicking as they were at the end of February, this trend is being gradually digested by the market, and many institutions are starting to reposition their investments in the belief that the current rise in Treasury yields is far from over. Deutsche Bank raised its year-end target for the U.S. 10-year Treasury yield by a full percentage point to 2.25%. Analysts at ING made clear that the yield on the U.S. 10-year Treasury note is likely to be well above 2% in the second quarter as the U.S. economy reopened and a USD 1.9 trillion fiscal stimulus package rolled out.

From a global perspective, the rise in interest rates is not an isolated phenomenon, but a common trend in major economies. Gao Shanwen, chief economist at Essence Securities, said bond yields in almost all major economies are rising. Compared to pre-pandemic levels in early 2020, Japan’s long-term bond yields, after a rapid rise, are already significantly higher than they were before the pandemic. Meanwhile, long-term bond yields in France and Germany have at least reached pre-pandemic levels, while U.S. bond yields are 30 to 40 basis points away from pre-pandemic levels. In this sense, the rise in U.S. bond yields is relatively modest. The current situation shows that although the current trend of global inflation is not obvious, the economy of developed countries is recovering rapidly under the circumstance of the continuous increase of global money supply and the popularization of vaccines in developed countries. This has led to inflationary expectations, which also means global liquidity easing is facing a “turning point”. Real interest rates are starting to return to pre-pandemic levels (zero interest rates) as nominal interest rates and inflation expectations rise.

In fact, according to a survey by BofA Securities, institutional investors have already begun to adjust their portfolios in response to rising interest rates. Therefore, although the rise in bond yields has not caused volatility in the U.S. stock market, a major structural change has taken place. On March 12, bank stocks rose on expectations of higher interest rates, with Wells Fargo and Citibank up more than 2% and JPMorgan Chase and Morgan Stanley up more than 1%. Meanwhile, U.S. industrial stocks continued to strengthen, with Boeing and Caterpillar up 6.82% and 4.2%, respectively. Growth stocks, on the other hand, generally fell, with Apple and Amazon down around 0.76%, Netflix down nearly 1% and Tesla down 0.84%. According to insiders, sustained rise in 10-year Treasury yields will fuel market expectations of rising inflation, pushing up prices of commodities such as crude oil, copper and aluminum, and putting downward pressure on gold prices. This change suggests that global capital markets are repricing and revaluing the rise in interest rates.

This trend in capital markets suggests that the growth-induced “taper tantrum” could return.

This trend in capital markets suggests that the growth-induced “taper tantrum” could return. In 2013, as the U.S. economy improved, the Fed gradually suspended its quantitative easing program, causing the “taper tantrum”, which led to the turmoil in the capital market and the bursting of the bubble. In this case, as ANBOUND has warned that liquidity “wiped out” in a capital market bubble will lead to increased demand for U.S. dollars and a return of U.S. dollar capital, affecting emerging markets including China. Liu Yuhui, a researcher at the Chinese Academy of Social Sciences, stated that “only after experiencing fiscal deficit expansion – rising interest rates – volatility in asset prices – the periodic elimination of redundant currency and credit, can the country make room for the next round of quantitative easing.” Under such circumstances, if the U.S. government continues to push the stimulus package and expand fiscal spending, it will inevitably promote a strong dollar policy, “wiping out” the overseas dollar liquidity while the policy rate

Due to the huge domestic market space and capital market regulation, China will be less affected. Meanwhile, the containment of the pandemic in China and the apparent economic recovery will make China’s capital market favored overseas. Therefore, the impact of U.S. dollar liquidity disturbance on China’s capital market is limited. However, the rise in global raw material prices is putting pressure on China’s domestic inflation and corporate earnings. At the same time, the constant flow of international short-term capital under the mechanism of “Shanghai-Shenzhen-Hong Kong Stock Connect” will also bring significant volatility to the domestic capital market, while the narrowing of interest rate differentials between China and the U.S. will also put pressure on the RMB exchange rate. Therefore, China needs to guard against risks and “stabilize leverage” to ensure the stability and development of the capital market. Above all, past perceptions of the global financial environment of “low growth, low inflation, and low interest rates” need to be changed to avoid misjudgments.

Final analysis conclusion

The repeated rise in U.S. Treasury bond yields indicates that the pick-up in interest rates has become a periodic trend. This trend will bring about a change in global liquidity, which may cause a revaluation and repricing of capital markets. This imminent liquidity “turning point” needs to be adequately estimated and addressed.

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About the Authors

Founder of Anbound Think Tank in 1993, Chan Kung is one of China’s renowned experts in information analysis. Most of Chan Kung‘s outstanding academic research activities are in economic information analysis, particularly in the area of public policy.

Wei Hongxu, graduated from the School of Mathematics of Peking University with a Ph.D. in Economics from the University of Birmingham, UK in 2010 and is a researcher at Anbound Consulting, an independent think tank with headquarters in Beijing.

5 New Skills to Learn in 2021

May 3, 2021

According to the American author, Robery Greene, “The future belongs to those who learn new skills and combine them in creative ways.”

Learning new skills not only opens up many avenues for you in terms of job prospects but also furthers your adaptability in a fast-changing world.

Irrespective of the field, skills always come in handy in making you stay relevant and job-worthy in the present market!

Remember it is all about making yourself marketable in today’s age!

Top 5 Skills You Must Acquire In 2021

Learning a new skill only has benefits, doesn’t it? Of course, it is easier to use some sources and buy homework online. But talking about skills is like opening a pandora’s box! The choices are plenty!

Listed below are 5 skills that we think will look good on your CV in 2021:

1. Information Technology and Cybersecurity

With the world coming to a standstill in 2020 and crippling back with the help of IT, tech skills are crucial to survive and sustain in a pandemic and post-pandemic era. It proved the existing huge gap between the needs and the existing human resource.

Further, with a lot of security concerns rising and companies facing huge cybersecurity threats, learning this skill might lead you to become the next cybersecurity professional in a reputed company with many companies reporting to have spent about $15 billion per week just to cyber secure their systems. The importance of cybersecurity has been raised, and companies started to educate their employees about the need and benefits of cybersecurity. Some of these customizable cybersecurity presentation slides helped them in achieving this.

Varsha Barooah, Director at Michael Page, India claimed, “The demand for roles such as security engineers, cybersecurity analysts and cybersecurity engineers is on the rise.”

There are studies that claim cyberattacks are considered to be one of the fastest-growing threats in the US.

While everybody is aware of the dangers of cyberattacks, not many organisations are well-equipped with cybersecurity professionals or practices that make them more vulnerable to such attacks.

Robert McKay, the Senior Vice President at Neustar said, “Cybersecurity experts predict that in 2021 there will be a cyber attack incident every 11 seconds. This is nearly twice what it was in 2019 (every 19 seconds), and four times the rate five years ago (every 40 seconds in 2016).”

As per the reports of Cybersecurity Venture, “It will cost global organizations over $6 trilliion per year to fight cyber crimes and there will be around 3.5 million unfilled security jobs.”

Talking about cybersecurity, do you worry about losing all your precious content, photographs and so on? Chainlink allows you to store all your data in a secure cloud space without any cyber threats whatsoever. The most significant use of Chainlink is to supply reliable data from both on-chain and off-chain sources to the App market.

If you’re wondering about how to buy Chainlink, there are many resources available online.

However, all of them are for people who are tech-savvy.

What if you are less technically inclined? Don’t lose heart! You can still pick up basic skills from related fields like Cloud Computing, Blockchain, Mobile App Development, Machine Learning, and so on. Working knowledge in these will give you an extra edge over the others the next time you walk in for a job interview.

2. Foreign Languages and Translation

While the English language continues to dominate the global market, interacting with people in their choice of language always helps in winning the first round! Not only does it make communication easier, but it also improves interpersonal skills to a large extent. Thus, being multilingual never hurt anyone!

Learning a new language is always fun and it can help you improve your career prospects, aid in school and college admissions, emigration, and so on.

While many languages would allure you, always remember to pick up a language that would help you in your future education as well as career prospects. Do not pick up a language because it is easy or just popular!

Did you know that knowing an extra language can boost your compensation by a significant percentage?

Worried about where to learn new languages from in this age of social distancing?

No need to panic or look further. Many online portals can help you in this cause! Some of them are Rosetta Stone, Duolingo, Babbel, Tandem and so on. All of these have excellent language learning features with some even offering their service for free!

With learning new languages, you might want to even try your hands at translation as well. With people sitting at home amidst the pandemic, more and more are getting attracted to the computer. Multilingual content at this stage would shoot up businesses.

With language and translation skills in place, you are sure to never go out of business! And you should also leverage the many benefits of a text expander tool, since it will help you save time thanks to the templates you can save in any languages you want!

3. Video and Audio Production

Come on! Let’s be honest and admit to watching at least a few Tik Tok videos during the lockdown! Like them or not, Tik Tok, Insta reels are grabbing the headlines with their ability to produce engaging content.

The buzz about digital content is partly due to the ease of access and the entertainment involved.

While print advertising is slowly giving way to digital advertising, surveys show that at least 54% of consumers wished to see the video content of brands of their choice.

Honing video production skills will increase your chances to feature in an ad agency or as a part of the brand image creation department.

Along with video production, audio production isn’t far away. Podcasts are the latest in business. You can up your skills using many of the new age apps available on the internet. OpenShot, GarageBand, Audacity are some to name a few.

4. Data Analysis

Want to come across as someone desirable in the job market? You just need a basic knowledge of knowing and understanding information.

‘Data’ continues to be the magic word even in 2021!

Which series will the readers want to watch next? Which documentary would attract more eyes? Data analysis today is not just limited to business choices but also aiding in quick advertising of content and products.

Be it Hotstar, Netflix, Amazon, data analysis is used to plan future data. If you have the skill of analytics, you are sure to gain priority in both advertising and marketing as this is one field that promises continued growth and demand.

Companies are looking for data analysts who would drive data-based marketing and increase viewership of all web-based platforms.

If you are interested, there are many courses available online that will help you strengthen your data analysis skills. There are various courses offered by Stanford, Texas universities and also MOOCs that provide detailed training in understanding and interpreting data for better market benefits.

5. Extended Reality – Virtual and Augmented

With the pandemic creating havoc, the scope of augmented reality (AR) has increased manifolds. But wait! While AR was all about fun and games till 2020, post that it has become a thing of utility. Some of the important fields where AR has made inroads are:

Healthcare: Most of us have already experienced doctor’s appointments online during the pandemic. Now with AR creating magic, a lot of medical procedures along with other interventions are using this technology for treatment.
Diagnostics: On-call mechanics or other repair workers are slowly becoming a thing of the past. Every time an appliance stops working, would you not rather look up any video that offers a DIY tutorial rather than spend hours dialing in the appliance executive’s number only to be left disappointed at the end?

The above are just to name a few. AR has also made its way into Retail, Art, and many other areas. Survey predicts that in the next five years, the demand for skilled technicians with sound knowledge of Extended Reality (XR) will grow unexpectedly.

There are many courses and online apps that can help you learn AR. University of Michigan, University of London, University of Toronto among many others offer courses on how to build AR and VR apps.

To sum up

While these are all tech-based skills that you can master to stay abreast with ever-changing tides, there are many other skills that you can try your hands on as well – Photography, braiding, cooking, graphic design, coin-collecting, gardening, cabinetry, film-making, and the list goes on.

Though we are living in a candidate-driven job market, it takes a lot of hard work to be noticed by recruiters.

You are trying your best to be on top of the game- upping your skills, learning new technologies, being up to date with the market and so on. But in all probability, everyone around you is doing the same as well!

Then, what sets you apart? Studies show that it is the ‘soft skills that determine your future! Be it time management, creativity, business communication, verbal communication, and so on. They give you this extra edge over the others and make your profile more likeable.

What are you waiting for? In the age and time of social distancing where the ‘work-from-home’ culture is the new normal, dominating the market and impending lockdowns looming large, this is the perfect time to learn a new skill or two and make it big at your next interview!

Feel free to let us know in the Comments section below what skill would you like to add to this list.

Good luck with your career!

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Why scale-ups matter – and how enabling them can boost the economic rebound from the pandemic

May 3, 2021

By Marjo Ilmari

Innovative scale-up companies are vital drivers for productivity and sustainable growth, both on a national and global level, says Marjo Ilmari, Senior Director, Accounts & Industry, ICT at Business Finland, the Finnish government organisation for innovation funding and trade, travel and investment promotion.

Just before the coronavirus pandemic threw the global economy into turmoil, there was a lively debate in Finland about the need to boost the productivity and competitiveness of the economy. Research published by Matti Pohjola, Professor Emeritus in Economics at Aalto University, showed that Finland was suffering from a long-term decline of labour productivity in industry and had invested less in product development and digital solutions than its competitors.

Scale-up Statistics in the Nordics 2017, a report published in October 2019 by Nordic Innovation, also provided food for thought to economic policymakers in Finland and internationally. The report offered a fascinating insight into the contribution of fast-growing scale-up companies to employment and wealth creation in Denmark, Finland, Iceland, Norway, and Sweden in 2014-2017. According to the report, the Nordic governments have increasingly focused on enabling conditions for the scaling up of enterprises as a lever to boost productivity growth and competitiveness, which had also motivated the report’s mission to deliver more comprehensive statistics and analysis on scale-ups and their impact.

The depth of the harmonised data in the report and its approach were something new. Previously, the definition and analysis of scale-ups have mainly focused on their employment impact, no doubt reflecting governments’ priorities about creating new jobs and taxpayers. In the report, a scale-up is defined as a company with 10 or more employees and an annual turnover of EUR 2 million or more to start with, which successfully grows the number of its employees and/or turnover by more than 20% annually over a three-year period. Three types of scale-up enterprises are analysed in the report:

Scale-ups by employment growth only (Employment Scale-ups)
Scale-ups by turnover and employment growth (Turnover and Employment Scale-ups)
Scale-ups by turnover growth only (Turnover Scale-ups)

The report’s findings show the growing significance of the scale-ups in the regional and national economies. In the period 2014-2017, a total of 6350 scale-ups were created in the Nordics, and they made a significant contribution to the region’s economy. For example, in the manufacturing and wholesale sectors, the Nordic scale-ups accounted for EUR 17.4 billion of goods in 2017, up from EUR 9.7 billion EUR in 2014.

However, only the Turnover Scale-ups experienced a positive development in their value added creation per employee, with an increase of 62% in the period 2014-2017. In fact, the Turnover Scale-ups generated an average of EUR 145,000 per employee in gross added value, which was 50% more per employee than the Employment Scale-ups.

Driving innovation and productivity growth

From Finland’s perspective, the report’s findings and Pohjola’s research represented an urgent call to action. Although Finland’s total of 1085 scale-ups in 2014-2017 was in line with the size of its national economy relative to the other Nordics, the statistics also showed that Finland lagged in last place in terms of its share of Turnover Scale-ups. The revelation that the Turnover Scale-ups create a staggering 50% more added value per employee than the Employment Scale-ups has raised awareness of their essential role as drivers for innovation and productivity growth in the future.

As the most productive businesses in the economy, the Turnover Scale-ups are also especially attractive to venture capital. A scalable business model, where the company’s turnover consistently grows faster than its cost structure while using as few human resources as possible, promises high returns to the investor. Business Finland’s latest statistics are more encouraging in this respect and show that in 2020 Finnish growth companies raised about EUR 1 billion in investments, which was a new record. The average investment also increased from around EUR 4 million to over EUR 6 million.

Growth companies can lead the rebound

It is crucial for Finland and all other countries that their scale-up companies survive through the current crisis. At Business Finland, we can already see that some young Finnish growth companies are playing an important role in the recovery from the recession. These companies have continued to grow even during the pandemic, increasing their sales by an average of 5% and their exports by 12%. This contrasts sharply with the general performance of Finnish export companies (about 50,000 in all), whose sales have fallen by an average of 9% and exports by 12%.

It is these growth companies that will also create many new jobs in the future. There is evidence that scale-up companies help create high-quality jobs with more satisfied employees and have a dynamic effect on local ecosystems, acting as role models and inspiring other companies. Their impact is multiplied when several scale-ups are clustered together, attracting and developing talent and building networks with the local ecosystem.

Some markets and industries will be transformed permanently by the time the pandemic is brought under control. The companies that have the vision and capacity to develop innovative solutions, services and products to meet the changing needs will be the ones that can succeed in the competition. Many of the most successful scale-ups operate in digital business sectors, and their significance is set to increase further in the coming years.

The smart way to recover and rebound from the recession is to support business renewal in the face of the global economy’s structural changes. The EU’s Green Deal can benefit from and accelerate the scale-ups’ dynamism. The aim is to mitigate the pandemic’s economic and social impact and to kick-start our economies towards a more sustainable and resilient future by grasping the opportunities of the green and digital transition.

According to Pohjola, innovation is the critical factor for sustainable economic growth. On a policy level, he calls for more investment in education and new technologies, policies to promote deregulation and more competition, and all possible measures that support the creation, introduction and spread of new ideas and the transfer of production resources from declining to thriving industries.

The qualities that often distinguish the scale-ups from other businesses include a ‘born global’ mindset that drives their vision and high ambition level for growth and internationalisation.

Scale-ups’ strengths and strategies for internationalisation

Each scale-up forges its unique path in terms of practical business strategies for fast growth and internationalisation. The qualities that often distinguish the scale-ups from other businesses include a ‘born global’ mindset that drives their vision and high ambition level for growth and internationalisation. For example, Finland’s domestic market is relatively small, so our innovative startups think internationally from day one. Their talented teams often include people from diverse backgrounds, which brings more credibility with international customers and the benefits of broader networks. For example, having an international expert on the company’s board or advisory board can open many new doors.

Other key strengths include an unfaltering customer focus combined with the adaptability, scalability and replicability of the company’s solution or service. The fastest-growing Finnish companies have based their business on solving the problems of the world’s leading companies. When a scale-up can bring unique value and solve an acute problem for a global leader, the solution can later be scaled to other companies, segments and markets. A successful company also understands that each new market requires adaptation and change. It chooses the target group where the value proposition and competitive advantage is most significant in that specific market while taking the competitive situation into account.

Fast growth is often also rooted in a truly data-driven approach and analysis where the company’s solution is continually developed and directed based on results and market feedback. Marketing performance is closely monitored based on metrics such as customer acquisition costs, customer value and churn.

Turning great ideas into business

Early-stage public innovation funding has been one of the most important enablers for many Finnish scale-ups, making it possible to share the risk related to their R&D activities. The exponential growth of Finland’s game industry from its humble beginnings is a powerful example of what is possible in this regard. Business Finland supported almost all the Finnish game startups with innovation funding when they worked on their first games 10-15 years ago. Today, the most successful companies like Supercell and their owners are some of Finland’s biggest corporate and personal taxpayers, business angels, startup investors and benefactors to society. In fact, the Finnish game industry contributed the most corporation tax to the government coffers from all the economic sectors in 2017 – an incredible achievement for this innovative group of companies whose line of business was not even on the radar of more traditional investors and industrialists for many years.

Today Business Finland is looking for the next global success stories and helping to make them happen. We want to make Finland the best possible location for starting and scaling up all kinds of businesses, from quantum computing to new types of food production and circular economy solutions – or something completely different. Business Finland is also actively attracting entrepreneurs from countries outside the European Union through the Finnish Startup Permit, making it possible for international growth entrepreneurs to build a company in Finland and become part of Finland’s vibrant startup ecosystem.

Higher productivity can also enable higher aims

The demand for new ideas, technologies and approaches has never been greater. Beyond the immediate challenge of protecting people’s health and livelihoods, we need solutions to combat climate change, for more sustainable business, production and consumption, and smarter services of all kinds.

According to Pohjola, productivity is the simplest and most useful indicator for a national economy’s success and the foundation for economic growth. Higher labour productivity is the result of technological progress, innovation and structural renewal of the economy.

Scale-ups are at the forefront of creating new services and more efficient ways of doing things. They are already doing good business in a fast-changing world. With more support, scale-ups can also become significant agents of change in the broader transformation of our economies, societies and the planet as a whole.

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About the Author

Mrs. Marjo Ilmari, Senior Director at Business Finland is the leader for ICT Industry and Account Management. Business Finland is the Finnish government organisation for innovation funding and trade, travel and investment promotion. Marjo is also in charge of the ownership steering of Business Finland Venture Capital Oy, which invests in early stage venture capital funds. Before joining Business Finland, Marjo pursued a career in management consulting, M&A advisory and business development in global telecom industry. She holds a Master’s degree from the Aalto University School of Business.

References

Technology, investments, structural change and productivity – Finland in international comparison (in Finnish), a report by professor Matti Pohjola, 4.2.2020.
https://julkaisut.valtioneuvosto.fi/bitstream/handle/10024/162051/TEM_2020_05.pdf?sequence=1&isAllowed=y
Productivity improvement should play a central role in social policy, a blog post in English by Seppo Kangaspunta, Ministerial Adviser, Ministry of Economic Affairs and Employment, 14.2.2020
https://tem.fi/en/blog/-/blogs/productivity-improvement-should-play-a-central-role-in-social-policy
Scale-ups in the Nordics, a report published by Nordic Innovation
https://www.nordicinnovation.org/2019/scale-ups-nordics-2017

Fintech Founder Dr. Ozan Ozerk on Entrepreneurship in a COVID-19 World

May 3, 2021

Dr. Ozan Ozerk is a successful fintech founder. Here, he shares his thoughts on entrepreneurship in a business landscape heavily impacted by the COVID-19 pandemic.

COVID-19 and the subsequent lockdowns have laid waste to numerous businesses. With a potential global recession on the horizon, it’s more important than ever to focus on the timeless entrepreneurial traits and skills that make up a successful businessperson.

Dr. Ozan Ozerk, founder of multiple global fintechs, is one such person. He’s a Norwegian medical doctor and entrepreneur of Turkish Cypriot descent, who has a long track record of establishing successful businesses in the social media and fintech space. Amongst others, he is the founder of the online trading platform EuroTrader, European Merchant Bank, Ozan SuperApp and the banking-as-a-service provider OpenPayd.

We sat down with Dr. Ozerk to pick his brain on what makes a good entrepreneur, and which pitfalls to avoid when starting and running a business.

First of all, what made you choose the entrepreneurial route?

Dr. Ozan Ozerk: Well, I worked on startups long before I got into medicine. For me, becoming an entrepreneur was never about money, but about freedom. It was about being able to try to do things my way, having an impact to do good. As a kid, and later at high school, I always tried to create small businesses out of what interested me at the time. But the true first step into commercial entrepreneurship started in my early 20s. In 2003 I co-founded an online media company in Norway, focusing on mobile based services and content. And later from 2005, we took that experience with us creating our first big success, the social media website Biip.no. Biip.no was very large in Norway, we had 80-90% of all teenagers in the country signed up as members. We eventually sold that for around $12 million in 2008, which provided a good stepping stone for my later entrepreneurial career.

So what came after Biip.no?

Dr. Ozan Ozerk: After Biip.no, I had to do my mandatory hospital service in Norway to keep my medical license, which didn’t help me focus on my start-ups. But I did enjoy working as a medical doctor and plan my move beyond the borders of Norway.

From an entrepreneurial perspective, I moved my focus from social media, to e-commerce and fintech and tried out various avenues with mixed success. To be honest – it was mostly failures. The fintech space was, and still is, a very competitive and regulated space to be in. But slowly my initiatives got traction, and I started to merge my various fintech and e-commerce start-ups into what today is known as OpenPayd. OpenPayd is a global payment and banking-as-a-service platform. As I got traction, I also gained the confidence to explore new venues within traditional banking. This led me to found European Merchant Bank, which offers online accounts, lending, cards, and trade finance to companies and individuals.

I have always been fascinated by the Chinese super app services, so we are currently testing our UK-based Ozan SuperApp in the Turkish market. This year I’ve also been exploring online trading services by launching EuroTrader in Europe. Soon, EuroTrader will be expanding into new markets as well.

How has COVID-19 impacted your business?

Dr. Ozan Ozerk: My business, like most other online businesses, has benefited in the short term because online businesses grew very fast as a consequence of the physical shops being shut down. In the long term, however, I’m sure it will have a hugely negative impact on the global economy, and fintechs will feel the negative impact eventually too. People working in certain industries, such as in the digital space, have so far not felt the true negative impact of the pandemic, which overall will serve to widen the gap within the society, as well as between countries.

So what’s your advice to entrepreneurs who are struggling?

Dr. Ozan Ozerk: In the entrepreneurial world, everyone likes talking about success stories, but I am more interested in people’s failure. I think that is where the true learning is. For every success, I’ve had plenty of failures myself. I think it was Thomas Edison who said: “I have not failed. I’ve just found 10,000 ways that won’t work”. And I think that’s true.

Whilst Covid-19 undoubtedly will have a negative impact on the global economy, the pandemic also represents an opportunity for savvy entrepreneurs. There is huge demand for new products and services in categories such as logistics, at home entertainment, e-commerce, health and beauty and many, many more. My advice is that people shouldn’t be afraid of failing, of trying something new in a post-Covid world. People that never try never fail, but they never succeed either. True entrepreneurs embrace their failures. Even if some of them are painful and hard to talk about.

Do you think there are cultural differences when it comes to the perception of failure in business?

Dr. Ozan Ozerk: Well, I believe there are some cultural differences when it comes to how societies perceive failures. In general, I feel that in Europe a past failure is viewed as a liability. A person that once went bankrupt or failed in their business is often considered a rogue, or simply less reliable. I think this view is highly unfortunate, and absolutely wrong.

My impression is that in the US society however, the view on failures is very different. It’s almost like the bigger the failure, the better. A great failure means you’re thinking big, and your level of ambition gets credit even if you ended up failing. I think that’s a much healthier view on failure, as it inspires future attempts at getting it right.

But when the going gets tough, how do you stay motivated?

Dr. Ozan Ozerk: I’d say you shouldn’t be driven by confirmation from the outside – but from within yourself. If you have a strong gut feeling about something, even if you end up being wrong, try it out. Stay true to what you believe in.

For example; when my former co-founders Erling Andersen, Bo Myras and I started Biip.no in 2004, no one believed in social media. You had some social media websites even back then, like Classmates and MySpace, but many wrote the whole thing off as a trend. We, on the other hand, saw a big potential in cornering the youth segment online. Early-to-late teens in Norway and abroad needed a platform to communicate with value-added services – and Biip.no was the perfect market fit. Later, Facebook came around and proved everybody right. It just goes to show you have to focus on what you believe in – and work in that direction.

And money – that shouldn’t matter?

Dr. Ozan Ozerk: Well, money always matters. But, the discussion you have as an entrepreneur is not about what private jet to buy or adding Ferraris to your car collection. Most entrepreneurs are chronically underfunded, and are doing everything in their power to make the ends meet. If you’re fortunate enough to raise money, you’ll be even more focused on the needs of your business. Taking other people’s money is a huge responsibility which shouldn’t be taken lightly.

True entrepreneurs don’t live the lifestyle you see of influencers on YouTube or Instagram, with yachts and cocktails. Even those who have the financial means to do it. As a real entrepreneur, you’ll have to be honest with yourself. If you truly want to succeed you need to be determined and put in the work. There is no easy way, there are no shortcuts. If you cut corners, I promise you you’ll be more broke, isolated, and unhappy than before you started.

So what’s your general message to other budding entrepreneurs?

Dr. Ozan Ozerk: The message, in general, is don’t give up, but learn from your mistakes and don’t believe that anyone is better than you. Let’s just take the selection process in the army: People applying for active duty, such as special forces, are mostly very fit. But in order to succeed with the selection process you need to stay focused, being able to inspire yourself along the way, even on days where you’re sleepless, tired and are being told to give up. Business is no different

Far too often I feel people hype up talented people. Almost creating an excuse why you’re set to fail. Talent matters, but hard work and perseverance is much more important. Steve Jobs once said: “If culture eats strategy for breakfast, ambition eats talent and a whole host of other things for lunch, dinner and an evening snack.”. There is truth to that. I also strongly believe, failure should not be seen as negative. It’s often the first, natural step on your way to success.

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