The Kauffman Foundation recently introduced the Kauffman Indicators of Early Stage Entrepreneurship.
The indicators cover:
- Rate of new entrepreneurs: The broadest measure possible for business creation by population.
- Opportunity share of new entrepreneurs: The percentage of new entrepreneurs who created a business out of choice instead of necessity.
- Startup early job creation: The number of jobs created in the first year of business.
- Startup early survival rate: The rate of survival in the first year of business.
The indicators cover the time frame from 1996 to 2017 and will be updated annually. They replace the Kauffman Index, which was also on entrepreneurial activity but not as data intense.
We first reported on the old Kauffman Index back in 2007 and have followed it every since. We will, of course, continue to follow the new indicators.
The most interesting finding from the new indicators is that early stage entrepreneurship was near a 20 year high in 2017.
As the study chart below (click to enlarge) shows, the rate of new entrepreneurs is fairly stable.
But after peaking in 2010, it declined until 2013 and then started to increase again.
The Kauffman Indicators use a somewhat unusual entrepreneurship measure - the percent of the adult U.S. population who create a new business each month.
In 2017 this worked out to be .33% of the adult population, or 330 out of 100,000 adults. This is just shy of the .34 in the peak years of 2009 and 2010.
There have been a number of reports on the decline of entrepreneurship in the U.S. over the past few years. See this Brookings Study or the Washington Post's The decline of American entrepreneurship — in five charts for examples.
The Kauffman data shows otherwise.
We agree with Kauffman that entrepreneurship is alive and well in America. We'll explain why in a future article.
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