Almost one in three working age individuals were either engaged in entrepreneurial activity or intended to start a business within the next three years. While the number of women in Wales setting up new businesses in 2021 also rose to a historic high.
That is according to the latest Global Entrepreneurship Team (GEM) report sponsored by the Welsh Government.
The report, led by Aston University and NatWest, found that the Covid pandemic created new opportunities for Welsh entrepreneurs in 2021.
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Based on a sample of over 10,000 individuals, the GEM report compared attitudes, activity and aspirations in the UK, Germany and the United States as well as the four home nations of the UK.
It found that the early-stage entrepreneurial activity rate of 10.3% in Wales is statistically similar to the rest of the UK (11.5%), significantly higher than that of Germany (6.9%), France (7.7%), but lower than that of the US (16.5%).
In 2021, early-stage entrepreneurial activity rose sharply compared to 2020 as the economy recovered after Covid lockdown restrictions were removed completely on 'freedom day' (the ending of all Covid lockdown restrictions in England) on 19 July last year.
However, the report found the rise was due to more nascent entrepreneurs than normal - individuals in the first three months of starting their new business venture - as many went ahead with their start-up plans that had been postponed in 2020 when many parts of society were closed for long periods.
Mark Hart, professor of small business and entrepreneurship at Aston Business School and deputy director of the UK's Enterprise Research Centre, led the report.
He said: "In 2020 we saw a collapse of early-stage entrepreneurial activity as many decided to delay their move into setting up their own business in the face of the most severe economic downturn in 300 years - but within 12 months it has bounced back.
"The GEM survey undertaken in the middle of 2021 showed a sharp rise in the number of individuals in the early stages of setting up a new business compared to even the pre-pandemic high in 2019. It is now at the highest level since the annual survey began in 1999 and is an indicator of the entrepreneurial resilience of the UK."
The number of women in Wales setting up new businesses in 2021 also sharply rose. Now almost one in ten of adult women are in the early stages of setting up their own business which is an historic high.
Professor Hart said: "The recovery in 2021 has been driven by more women than ever before taking the steps to set up their own business. In 2021, it is no longer the case that ‘women are half as likely as men to start their own business’. It now stands at almost three-quarters across the UK although there are significant differences among the home nations with Wales closest to parity at 92%."
He added: "The more than doubling of older early-stage entrepreneurial activity may be explained by the ‘Great Resignation’ observed in the pandemic as older individuals re-evaluate their future economic activity and their position in the labour market.
"Importantly, for the UK economy, the pandemic has had no damaging impact on the level of entrepreneurial activity by immigrants and ethnic-minorities which remains higher than life-long residents and the non-ethnic population.
"However, the current energy crisis, and the forecast of recession to come, means that we need to ensure that nascent entrepreneurs have the support they need from all quarters to survive this next economic tsunami which is already having an effect with rising insolvency rates across many sectors."
Andrew Harrison, head of Business Banking NatWest, said: “The findings of this report, against a challenging backdrop of the pandemic and the cost of living crisis, once again confirm that Wales is a nation of entrepreneurs, with around 1 in 3 adults now either running a business or looking at starting one.
“The resilience of small businesses over recent years is both inspiring and important. As the economy faces significant turbulence in the year ahead, it is critical that Wales, and the rest of the UK, have a thriving ecosystem to support this boom in entrepreneurship, which is central to economic stability and growth.
"As the UK’s biggest bank for business, we are determined to play our part in helping the future business success stories start, scale and thrive."
GEM is the world’s largest survey of entrepreneurship and is the only global research source that collects data on entrepreneurship directly from individual entrepreneurs. It measures various rates of entrepreneurship in 47 countries in 2021.
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