According to population statistics, the ‘Silver Economy’ is growing fast, but what are the real prospects for this emerging sector?
Where does the ‘Silver Economy’ stand vis-à-vis the new technologies sector? The Ile de France (Paris region) Silver Valley network has just published its first report on the state of play in this sector, which points up some of the obstacles – especially financing problems – facing entrepreneurs in this field. In France there are now 15 million people aged 60 or over, a figure which will have risen to 20 million by 2030. Society will therefore have to make some structural changes, which is where the Silver Economy comes in. This sector has real growth potential – an estimated 0.5% per year, and employment potential – 300,000 jobs forecast by 2020. The Silver Valley report is based on statements from 54 heads of Silver Economy companies that have been up and running for less than five years, and from ten investors from the public and private sectors in twelve regions of France. It reveals funding processes full of pitfalls due to competition for funds and lack of basic support, not forgetting the currently unhelpful economic climate.
Multiple funding approaches and business models
Although the demographic revolution is likely to create a substantial market, especially in services to older people, raising funds is nevertheless proving to be a difficult task. A lack of consensus on what innovations are needed, coupled with the complex economic environment, are creating obstacles for most entrepreneurs in this field. There are a number of reasons. Apart from the fact that this is an emerging sector, French Silver Economy entrepreneurs seem to be experiencing difficulties finding their way around the financial maze, given the diversity of providers and backers. Financial support is available at various levels – regional, national and EU – and in a range of formats including public subsidies, interest-free reimbursable advances, interest-bearing loans, etc, plus the option of selling a stake in the business to Business Angels, Venture Capitalists and other players. Moreover the range of business models in this sector is very diverse, including B to B, B to B to C and B to C models. Meanwhile there is a “serious lack of co-operation between the various financing players,” says the report – with financiers and entrepreneurs pointing to the absence of continuous, joined-up backing.
Driving the Silver Economy forward
The study reveals that French Silver Economy entrepreneurs are mainly professional people working on their own with the ambition of developing an innovative product and/or service in the fields of engineering, retail or healthcare. They are usually known as ‘social entrepreneurs’, i.e. people who are looking to run a viable business while at the same time helping and supporting older people and their carers. However, if they are to be competitive – and nowadays that means at international level – they will need to find a way to capitalise fully on the high potential of the business. Meanwhile the lacklustre economic environment is only adding to the sluggish investment trend, especially when it comes to getting their product into mass production and taking the product or service to market. In order to achieve the right balance, the report argues for a stronger role for dedicated regional innovation clusters. Investors should start to trust these clusters once projects have been selected, and the clusters will at the same time provide Silver Economy entrepreneurs with basic support and facilitate access to markets, argue the authors.