The Importance Of SMEs

The importance of small and medium-sized enterprises (SMEs) cannot be overstated. For example, in the European Union (EU), SMEs with less than 250 employees:

  • Constitute 99.8% of all firms
  • Employ 75.2% of the labour force
  • Contribute to 53% of the gross value added of the total economy
  • Are the biggest net job creators

In addition, there is a sub-sample of SMEs that rank in the top-3 in terms of global market share in their market niches. These are known as "hidden champions".

As of 2014, Germany had the highest number of "hidden champions" in the world, both in absolute terms (1,300+) and per capita (16 per 1,000,000 residents). Their success in no small part is due to the 1,500+ banks that the country has (the highest number in Europe).

Of these, around 70% are locally-controlled, small, community banks that lend to local SMEs, that in turn account for a large bulk of German exports.

However, despite this success and their general importance to an economy, SMEs often have a hard time accessing external funding, and when their loan applications are accepted, the terms of the loan contract are generally less advantageous compared to larger borrowers.

Valhalla Network’s aims to solve these issues and have a mission to build a network of community banks governed by a decentralized autonomous organization (DAO).