Ultrapreneurs: Betting on Safe Markets

Emerging markets accounted for four-fifths of global economic growth this decade. Yet the most successful elite entrepreneurs, despite being natural risk-takers, prefer to expand their companies’ operations in developed countries. They go by their “gut feeling” rather than an impartial analysis of potential opportunities.

Such findings from university and industry research may be surprising. But dig a little deeper and the preference for stable countries with slower growth makes sense.

“If your primary goal is to maximize profits with the lowest risk, it is natural to invest in markets that you are familiar with,” said California-based Kamran Elahian, 62, who has co-founded 10 companies in the United States. Of these firms, three failed but the rest created a total market capitalisation of more than $8 billion.

Choosing foreign markets for expansion is especially difficult for small firms.

A 2014 study by Italian academics found that entrepreneurs preferred countries perceived as close to their home nations when they first expand to foreign markets.

Where the opportunities lie

As part of BNP Paribas Wealth Management’s 2017 Global Entrepreneur Report, the French bank interviewed 538 “Ultrapreneurs” or business owners with net investible wealth of more than $25 million.

The report found that in addition to being more environmentally aware – 77% ranked CSR as important or extremely important - Ultrapreneurs didn’t want to move into developing markets despite the favourable media attention BRIC countries — Brazil, Russia, India and China — have received as investment opportunities.

Ultrapreneurs ranked the United States as offering the best opportunity to start or run a business, chiefly because of the level of industry expertise available. China, the only BRIC country to make it to the 10 most favoured markets, came in second, and was followed by Germany, France, United Kingdom, Japan, Hong Kong, Switzerland, Australia and Singapore.

“The top reasons for choosing these countries vary widely and are also determined partly by the types of industry entrepreneurs are active in,” the BNP Paribas Wealth Management report states.

“In China the primary driver cited is, intriguingly, a growing sense of sustained political stability. Germany’s appeal is underpinned by a combination of political stability and a culture of innovation.”

Ultrapreneurs most often cited educational development as the sector that offers the most opportunity. This area was followed by communication, population growth, scientific breakthroughs, and healthcare and wellness. Conversely, Ultrapreneurs saw the spectre of war or conflict as the biggest threat to their ambitions.

In the second part of this article to be published next week, we will explore how the preferences of Ultrapreneurs tallies with the countries identified as having the most middle class potential.