Startup Activity in America -- A Look at Startup Policy and the Kauffman Index

© 2013 Ewing Marion Kauffman Foundation

www.kauffman.org© 2013 Ewing Marion Kauffman Foundation

Startup Activity in America

Jason Wiens & Arnobio MorelixEwing Marion Kauffman Foundation

August 31, 2016


Young Firms Create the Most Jobs

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Net Job Creation by Firm Age

Age 0-5 Age 6-10Year

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Startups Create Jobs and…

Spur innovation, and

Provide paths to upward economic mobility, and

Make the U.S. economy dynamic.


Understanding the Kauffman Index of Entrepreneurship Series

• Go-to set of indicatorso “Jobs Report” for unemployment rate and labor market healtho Consumer Price Index for inflation rate and changes in prices

• Kauffman Index: set indicators to measure all things entrepreneurship


3 Distinct Aspects of Entrepreneurship


Kauffman Index of Startup Activity


4 Takeaways from the Kauffman Index of Startup Activity

• Startup Activity is on the Riseo Increased for the second year in a row after reaching its lowest level in the past two

decades only two years agoo Increase in 23 out of 40 largest metros and in 30 of the 50 stateso 889,000 jobs created by new establishments in the last quarter of 2015 alone

• highest job creation number by new establishments since early 2008

• 4 Takeawayso 1) New Face of the American Entrepreneuro 2) Return of Opportunity Entrepreneurshipo 3) Geography of Startup Activityo 4) Startup Great Recession Hangover and Long-Term Decline


1) New Face of the American Entrepreneur

• Narrowing Startup Gender Gapo Rate of new entrepreneurs for women is the highest since 1996o Startup gender gap is still wide, it has narrowed in the latest year

• from 0.22% in 2014 to 0.26 in 2015 for females• 0.42% for males

• Increasing Racial Diversity Among New Entrepreneurso New entrepreneurs from racial minority backgrounds (e.g., Asian, Black, Latino,

Native-American)• 1996: 23% (2 in 10 new entrepreneurs)• 2015: 40% (4 in 10)


2) Return of Opportunity Entrepreneurship

• In 2015, the share of opportunity entrepreneurs was 84 percent – 10 percent points higher than it was in 2011 in the aftermath of the Great Recession


3) Geography of Startup ActivityMetro Areas

• Highest Startup Activity – 2016 Rankings

1. Austin2. Miami3. Los Angeles4. San Francisco5. Las Vegas

• Biggest positive shift in ranks from 2015 to 2016 were:

1. Orlando (33 to 21)2. Kansas City (29 to 18)3. Cincinnati (31 to 24)4. Nashville (23 to 16)5. Detroit (35 to 30) and San Francisco

(9 to 4)


3) Geography of Startup ActivityLarger States


1. Texas2. Florida3. California4. New York5. Colorado


1. New Jersey (18 to 7)2. Michigan (19 to 11)3. Minnesota (24 to 21)


3) Geography of Startup ActivitySmaller States


1. Montana2. Nevada3. Wyoming4. Oklahoma5. Alaska


1. Oregon (22 to 15)2. Oklahoma (8 to 4)3. North Dakota (11 to 7)


4) Startup Great Recession Hangover

• Still below peak preceding Recession dropo Long Great Recession hangover in startup activity


Challenge: Fewer Americans Are Starting Businesses


Challenge: Death Rates Are Increasing

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Firm Births and Deaths over Time

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U.S

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Good Policy Can Overcome Challenges

1. Welcome Immigrants

2. Reduce and Eliminate Barriers to Entry

3. Develop Human Capital


Welcome Immigrants


Reduce and Eliminate Barriers to Entry

Occupational Licensing• Apply the appropriate protection at minimal burden

Non-Compete Agreements• Ban• Narrow the scope• Disclose earlier• Educate workers

Opportunity Cost of Trying• The opportunity cost of trying—not insufficient funds—is a primary

barrier to starting a new business.


Develop Human Capital


Consider Kauffman a Resource

Entrepreneurship Policy Digest www.kauffman.org/policydigest

Kauffman Index of Entrepreneurship Serieswww.kauffmanindex.org

Jason Wiens Arnobio MorelixPolicy Director Senior Research [email protected] [email protected]

Startup Activity in America -- A Look at Startup Policy and the Kauffman Index

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Transcript of Startup Activity in America -- A Look at Startup Policy and the Kauffman Index