#536 – Entrepreneurial Activity Increases

Posted on | The Agurban

Entrepreneurial Activity Increases

We look to the Kauffman Foundation as the “go to” place for all things entrepreneurial. The Foundation recently released their 2015 Startup Activity Index which looks at the number of new businesses started each month, on average. The 2015 Index is slightly higher than the 2014 Index. Following is the full release:

Nation’s Startup Activity Reverses Five-Year Downward Trend, Annual Kauffman Index Reports

Reversing a downward cycle that began in 2010, U.S. startup activity ascended last year, according to the 2015 Kauffman Index: Startup Activity. National business creation findings were released today, and state and metropolitan data will be released June 4.

Over the past two decades, the Startup Activity Index generally has risen or fallen in tandem with the business cycle – up in the 1990s expansionary period and plummeting as the Great Recession took hold. The entrepreneurial activity increase in the 2015 Index represents the largest year-over-year increase in the last two decades, giving rise to hope for a revival of entrepreneurship; however, the return remains tepid and well below historical trends.

In the 2015 Index, 310 out of 100,000 adults, or 0.31 percent, started new businesses each month, on average. In the 2014 Index, the average was 0.28 percent of the adult population.

“This rebound in entrepreneurial activity lines up with the strength we’ve seen in other economic indicators, and should generate hope for further economic expansion,” said Dane Stangler, vice president of Research and Policy at the Kauffman Foundation. “But, it’s important to view this short-term uptick in context of the bigger picture – we are still in a long-term decline of activity, which affects job creation, innovation and economic growth.”

Most new entrepreneurs – 63.2 percent – were men. The 36.8 percent of females who became entrepreneurs in the 2015 Index is close to the two-decade low of 36.3 percent in the 2008 Kauffman Index. The rate of new entrepreneurs grew for all age groups except those aged 45 to 54, which experienced no change in the 2015 Index.

All racial and ethnic groups – particularly Latinos – experienced increases in the rate of new entrepreneurs between the 2014 Index and the 2015 Index. The Latino share of all new entrepreneurs rose from 10.0 percent in 1996 to 22.1 percent in 2014. The Asian share also rose substantially during this period. The share of white entrepreneurs declined over the past 18 years, and the black share increased slightly.

A growing immigrant population and the high likelihood of immigrants becoming entrepreneurs contributed to a rising share of new immigrant entrepreneurs: 28.5 percent of all new entrepreneurs are immigrants in the 2015 Index, compared to 13.3 percent in the 1997 Index.

For the full report, visit here.