Not since the early 1980s has a generation of graduates emerged from university to such a barren job market.

And at least in previous recessions students’ passage through higher education was financed by the state, whereas today’s hapless university leavers are burdened with record debts thanks to the introduction of top-up fees. It’s a sad fact of any recession that young people are caught in the catch-22 situation of being unable to get jobs commensurate with their qualifications for want of experience, but unable to amass such experience without first getting a decent job.

Risky choices

A survey of the top 100 graduate employers by the Higher Education Statistics Agency recently revealed that vacancies have been cut by more than a quarter (28%) this year, while roughly one in five (19%) graduates who have found work in the three and a half years subsequent to leaving university aren’t in graduate-level jobs.

Debt-ridden and with vacancies at top firms in their field at a premium, perhaps university leavers might be more inclined to consider starting a business instead – if you can’t join them, beat them. Perhaps those hitherto intent on a safe, structured career progression might surmise that in a post-bust world, where few are free of worry about their jobs, assets and finances, starting a business is only one of many risky career choices.

And contrary to what many might reasonably assume, starting an enterprise in a recession isn’t the equivalent of holidaying in war-torn countries. Rather, it can be more like coming on as a substitute in a football match: as poorly-run companies fold, leaving market gaps, you can be the "fresh pair of legs" to capitalise when the market recovers.

Property purchase or rental costs are lower during downturns, while the pool of talent to recruit from is broader and deeper due to high unemployment. And consumers don’t stop buying in recessions, they just buy smarter.

Entrepreneurs that offer value in tough economic times can thrive. Some sectors are even recession-proof, usually those selling non-discretionary goods, although evidence abounds that affordable luxuries sell well too.

Reluctant banks

But if finding work is more difficult, so too, surely, is generating the business financing to kick-start a venture. Just as employers, drawing on a larger pool of talent, are reluctant to take a chance on the inexperienced, banks withhold credit from all but the surest of sure things – and that means, depressingly, entrepreneurs with a track record of success in what some refer to condescendingly as the ‘real world’.

What chance does a graduate with scant work experience – let alone a background of running businesses – and huge debts have of getting credit?

Well, one development is helping young entrepreneurs bridge the finance and experience gap with older business people: the internet.

Dotcom entrepreneurs often emerge from university. If anything, a fifty-something setting up a social network would seem unusual and less credible than a 20-year-old student.

Gavin Edley, an Open University graduate who funded his copywriting business, Midas Copy, proceeds from the sale of a website he founded while doing his A-levels, believes using the internet "helps level the playing field with people with more experience" in other areas. "It gives you a bit more credibility as a young person."

The so-called Generation Y have grown up with computers and the internet and are more at ease with both than their parents could ever be. And this is a major trump card to hold, as people increasingly consume news, communicate and, of course, shop online.

An online business can also be set up and operated part-time from home on a comparative shoestring. A website can act as a shop front, negating the need for two huge overheads, retail premises and staff. With the shopping process automated, a dotcom can effectively run itself for long periods.

It’s no surprise then that students who moonlight as entrepreneurs invariably choose to set up internet businesses. Gavin Edley, who founded both his enterprises while studying, believes harnessing the web was essential. "In the first year all the custom came through the internet," he says. "Without it, I don’t think I would have been able to build the client-base up."

American funding

The same undoubtedly applies to a pair of Oxford graduates who last year sold their online auction management company for £2.5m less than a year after launch. Cousins Kulveer and Harjeet Taggar, 24 and 22 respectively, set up Boso.com while still at university, eating nothing but noodles for six months and living in an apartment devoid of furniture save for mattresses and desks.

The site attracted the attention of US investors so when the site launched in 2007 as Auctomatic it was with American funding and the cousins stationed in plusher surroundings in Silicon Valley. Bob Goodson and Kirill Makharinsky, who founded YouNoodle, a social networking site for entrepreneurs, are another example of Oxford alumni who decamped to the US.

It’s a common enough story. While dotcoms are relatively cheap to start if you’re building a lifestyle business, the most ambitious entrepreneurs need serious investment, not to mention a supportive business environment – and that tends to be more easily found in Silicon Valley than Thames Valley.

Kulveer’s explanation for their move across the Atlantic was a damning indictment of the UK: "It would have been too expensive and complicated to set up an office and hire staff in London. Getting investment here is a much more protracted process with investors imposing all sorts of constraints.

"It took Y Combinator just 15 minutes to decide to invest in us. When I was emailing Paul Buccheit to talk about investment, he said, ‘how about $50,000?’ I replied that $75,000 would be nicer and he just said, ‘OK, fine’. Investors there are more willing to take risks."

In the computing Mecca that is Silicon Valley, technology companies and universities collaborate frequently, fluidly and harmoniously, with ideas, innovation and talent genuinely flowing both ways. The generous, open-minded investment community, meanwhile, makes for a compelling trinity.

One of the biggest success stories to emerge from a region densely packed with web giants and dotcom start-ups is a social network founded in 2004 by a 20-year-old Harvard student called Mark Zuckerberg. When Zuckerberg realised the potential of his brainchild, he quit his computer science degree and predictably headed for the dotcom capital of the world.

One year later Facebook, initially set up exclusively for Harvard students, had one million users across the US and five years on has 300 million worldwide.

Given such staggering growth the size of the bids made for Facebook in 2006 from Viacom and Yahoo, $750m and $1bn respectively, seemed eminently reasonable. However, the perverse economics of the net, where an orthodoxy prevails that websites should be free to use, have prevented the world’s most popular social network from being cash-flow positive until recently.

Zuckerberg, who has recently expanded Facebook’s staff by 50 percent, is gambling that more intelligent, better targeted advertising will boost ad revenues to levels commensurate with a 300-million-customer company. If he gets even halfway to this target, the comparatively low overheads of servicing customers globally from a single website means he could rake in billions.

Alternatively, Facebook’s nemesis could emerge from the dormitory of a (probably American) university and it could go the way of Friends Reunited.

Did Zuckerberg demonstrate youthful naivety when he rebuffed astronomic bids for his company? More like entrepreneurial naivety; after all, many business people would assert that without naivety, they’d have been too beset by worry to go into business in the first place.

Transformative

Another website to emerge from the Californian dotcom hotbed is the website of all websites, Google. When Stanford PhD students Sergey Brin and Larry Page realised the ramifications of their idea, to develop a program that could filter the still-nascent web’s content according to relevance and popularity, they suspended their computer science course to set up Backrub, Google’s forerunner, in 1996.

However, the course was ultimately pivotal in sparking arguably – and this surely isn’t hyperbole – one of mankind’s most transformative ideas. Larry Page had been writing a dissertation on the World Wide Web’s mathematical properties, and his supervisor, Terry Winograd, suggested he focus in particular on its link structure – the best advice he’d ever received, he says.

If ever a dissertation deserved an A+ it was Page’s, ultimately giving rise to a concept that has transformed commerce, communication and the dissemination of information, and created new industries, while transforming or destroying others.

And yet sometimes, there seems a tension between academia and real-life business – insofar as the academic deals with abstract, theoretical concepts; the entrepreneur in pragmatic solutions to everyday problems. The academic seeks to explain the world according to elegant and unifying but ultimately inflexible and simplistic paradigms; the entrepreneur deals with the world as it is – messy, chaotic, uncertain – and adapts his approach according to circumstances. The academic extrapolates from written case studies; the entrepreneur learns from his own day-to-day experiences.

This paradox between the disciplines helps explain why dyslexics often struggle at school but thrive as entrepreneurs.

Ben Way, a dotcom millionaire who started his first business aged only 15, found words and numbers unfathomable throughout school and was told by a teacher when he was seven that he’d never make anything of himself. Only when he began learning how maths or language applied to everyday life – the revelatory moment came when he started calculating how much it would cost him to buy a boat – did numbers suddenly acquire meaning.

"I’ve since realised that part of the problem with dyslexics is that there has to be a reason for us to do something," he wrote in the Times. Research by the Cass Business School in London has shown that entrepreneurs are twice as likely to be dyslexic as the rest of the population.

So did the abstract theory taught in his Open University course help Gavin Edley in the unpredictable real world? "A lot of people ask me this," he admits. "I’m glad I did it. It helps you set out a strategic plan, and there are models and theories you can apply to real-life situations."

However, he adds, "a lot of it was centred towards larger organisations, and you can find relevant information on the net as and when you need it. But the degree adds a bit of credibility to me as a person, shows I’ve got a bit of intelligence."

Although Edley insists that he’d still study and set up the business concurrently if he had his time again, he admits that "it was demanding on my time. Given the progress I’ve made in the short time since completing the degree, you can see how studying at the same time affected it."

E-businesses, offering low overheads and low maintenance, have democratised entrepreneurship, broadening access to time- and cash-poor students. More at ease with computers than their elders, twenty-somethings and even teenagers are in the vanguard of innovation on the web, the advent of which has been every bit as epoch-making as the construction of the railways or the invention of television.

Taunts that students don’t understand the ‘real world’ suddenly look a little hollow. It’s just a shame that so many of Britain’s dotcom prodigies defect to Silicon Valley for second-stage investment and support.

As the UK scrambles to compensate for a shrivelled financial sector, it’s imperative that it keeps its online talent in the country that bore Tim Berners-Lee, the World Wide Web’s inventor.