Kauffman Foundation: 2017 National Report on Early-Stage Entrepreneurship

Summary of Study

Bottom Line: The Kauffman Indicators of Early-Stage Entrepreneurship (KESE) offers a guidepost for a broad picture of early-stage entrepreneurship by tracking changes in entrepreneurial activity over time at the national level. The KESE Index increased from 0.50 in 2016 to 0.68 in 2017, the highest level recorded over the past two decades. This increase was driven by increases in the rate of new entrepreneurs, startup early job creation, and startup early survival rate.

The purpose of entrepreneurship indicators is to provide a picture of early-stage entrepreneurial activity. The indicators track changes in entrepreneurial activity over time, across geographies, and among various demographic groups. Entrepreneurial indicators help people better understand trends in different dimensions of entrepreneurial activity.

In addition to the KESE Index, the following component entrepreneurship indicators should also be considered:

The rate of new entrepreneurs in 2017 was 0.33 percent, which reflects that 330 out of every 100,000 adults became new entrepreneurs in an average month, continuing an upward trend over the past several years. 

  • The opportunity share of new entrepreneurs, representing the percentage of new entrepreneurs who created businesses out of opportunity instead of necessity, was 84.4 percent in 2017 -- down from 86.3 percent in 2016. 

  • The startup early job creation indicator was 5.27 jobs per 1,000 people in 2017, reflecting an increase from 5.23 jobs per 1,000 people in 2016, but a longer-term decline from 6.23 in 2007.

  • The startup early survival rate indicator was 79.78 percent in 2017, representing a small increase from 79.58 percent in 2016 and 77.88 percent in 2007.

  • The rate of new entrepreneurs was 0.27 percent among women and 0.40 percent among men in 2017, an increase among women, yet about the same among men.

  • The rate of new entrepreneurs in 2017 was similar among whites (0.30 percent), African Americans (0.30 percent), and Asians (0.31 percent), and it was much higher for Latinos (0.50 percent).

    • The fastest increase in 2017 was among African Americans, as the rate of new entrepreneurs among African Americans increased by 39 percent from 2016, when it was 0.22 percent.

    • When compared to 2007, rates of entrepreneurship have increased dramatically among Latinos (up by 24.6 percent) and African Americans (up by 37.8 percent). The rate of new entrepreneurs among whites has remained steady (with a slight increase of 0.5 percent since 2007), and it has declined slightly among Asians (-3.9 percent).

    • The share of new entrepreneurs who are from minority groups is now 45 percent, a considerable increase since 2007 when 33.6 percent of new businesses were started by non-whites.

  • The rate of new entrepreneurs was 0.56 percent for immigrants in 2017, which means they are twice as likely to start businesses as native-born Americans (0.28 percent). Both groups started businesses at slightly higher rates than they did in 2016 and 2007.

    • Immigrants now comprise nearly 30 percent of all new entrepreneurs, a substantial increase from 2007, when 24.6 percent of new entrepreneurs were immigrants.

  • The rate of new entrepreneurs was highest among Americans aged 45–54 (0.39 percent) and 55–64 (0.38 percent), and lowest among Americans aged 20–34 (0.24 percent). The rate of new entrepreneurs increased between 2016 and 2017 among all age groups.

Read the full study here

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Findings:

 

  • The Kauffman Indicators of Early-Stage Entrepreneurship (KESE) increased from 0.50 in 2016 to 0.68 in 2017, the highest level recorded over the past two decades.

  • This increase was driven by increases in the rate of new entrepreneurs, startup early job creation, and startup early survival rate.

  • The rate of new entrepreneurs in 2017 was 0.33 percent, which reflects that 330 out of every 100,000 adults became new entrepreneurs in an average month, continuing an upward trend over the past several years.