In 2014, an averageof 0.31 percent of the adult population, or 310 out of 100,000 adults, created a new business each month.This business-creation rate translates into more than 500,000 adults becoming entrepreneurs in each month during the year. In 2014, the Rate of New Entrepreneurs reversed a downward trend over the past few years. The Rate of New Entrepreneurs increased from 0.28 percent of the adultpopulation (280 out of 100,000) in 2013 to 0.31 percent (310 out of 100,000) in 2014.
“OPPORTUNITY” VERSUS “NECESSITY” ENTREPRENEURSHIP
An increase in entrepreneurship rates could be driven by improving conditions for high-growth potential businesses (sometimes referred to as “opportunity” entrepreneurship) or worsening labor market conditions that result in “necessity” entrepreneurship.
The share of new entrepreneurs who are not coming directly out of unemployment was substantially higher than at the end of the Great Recession; 79.6% in 2014 compared to 73.8% in 2009.
Over the past two decades, the share of new business creation from “opportunity” entrepreneurship increased when economic conditions were improving and decreased when economic conditions were worsening. The largest share of “opportunity” entrepreneurship occurred at the height of the “Roaring ’90s,” and the smallest share was in 2009 at the end of the Great Recession. The share of opportunity business creation also decreased in the recession of the early 2000s and increased in the following growth period in the mid-2000s.
ACTIVITY BY DEMOGRAPHICS
The Rate of New Entrepreneurs among immigrants of 0.52 percent is substantially higher than that for the native-born of 0.27 percent. A growing immigrant population and rising entrepreneurship rate contributed to a rising share of new entrepreneurs that are immigrant. Immigrant entrepreneurs represent nearly 30 percent of all new entrepreneurs in 2014, which is up substantially from 13.3 percent in 1996.
ACTIVITY BY GENDER
Overall, men are substantially more likely to start businesses each month than are women, which holds in all reported years. In 2014, the male Rate of New Entrepreneurs was 0.41 percent, compared with the female Rate of New Entrepreneurs of 0.22 percent.
ACTIVITY BY STATE
In overall startup activity, all cities that ranked in the top 10 with the most startup activity in the 2014 Index remained in the top 10 in the 2015 Index. The top 10 metros were, in this order, centered on the cities of: Austin, Miami, San Jose, Los Angeles, San Francisco, New York, Houston, San Diego and San Antonio.
The rate of new entrepreneurs, one of the components of the Kauffman Index, varied widely across metropolitan areas, from 0.55 percent to 0.13 percent. Austin, Texas, came out on top, at 0.55 percent rate of new entrepreneurs, or 550 new entrepreneurs per month on average, followed by Miami at 0.52 percent and San Jose, Calif., at 0.41 percent.
In the 2015 Index, the rate of new entrepreneurs varied from 0.17 percent – or 170 entrepreneurs per month for every 100,000 adults – in Wisconsin to 0.54 percent in Montana. Western states, including California, Nevada and New Mexico, fared particularly well on the rate of new entrepreneurs in the 2015 Index.
Opportunity share also revealed a divergent range of results between states. At the low end in the 2015 Index, Alabama had a 69.0 percent opportunity share of new entrepreneurs, which means that approximately three in 10 new Alabama entrepreneurs came directly from unemployment. On the high end, Idaho had a 90.3 percent opportunity share, or just one in 10 new entrepreneurs starting their businesses when they were unemployed.
States’ startup density range in the 2015 Index spans from the low end of 81.4 startups per 100,000 people in West Virginia to the high end of 244.7 startups per 100,000 people in North Dakota.
ENTREPRENEURSHIP BY INDUSTRY