Kauffman Foundation: 2017 State Report On Early-Stage Entrepreneurship

Summary of Study

Bottom Line: The overall Kauffman Early-Stage Entrepreneurship (KESE) Index—a composite of four entrepreneurship indicators—ranged from -2.93 in Rhode Island to 2.86 in California, with a median of 0.01 across all 50 states and Washington D.C. The national figure was 0.68, an increase from 0.50 in 2016 and the highest level recorded over the past two decades. It was driven by increases in the rate of new entrepreneurs, startup early job creation, and startup early survival rate.

The purpose of these 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.

Aside from the KESE Index, the subcomponents showed wide entrepreneurship differences among the states:

  • The rate of new entrepreneurs ranged from a low of 0.16 percent in Delaware to a high of 0.47 percent in Wyoming, with a median of 0.30 percent.

    • Nationally, the rate of new entrepreneurs in 2017 was 0.33 percent, meaning that an average of 330 out of every 100,000 adults became new entrepreneurs in a given month.

  • The opportunity share of new entrepreneurs estimates the percentage of those new entrepreneurs who created their businesses out of opportunity instead of necessity. This indicator ranged from a low of 68.7 percent in Rhode Island to a high of 94.0 percent in Nebraska, with a median of 84.7 percent.

    • The national opportunity share of new entrepreneurs in 2017 was 84.4 percent.

  • Startup early job creation captures job creation, measured as the total number of jobs created by startups per capita. This indicator ranged from 2.95 jobs per 1,000 people in West Virginia to 10.34 in the District of Columbia, with a median of 4.71.

    • The national startup early job creation in 2017 was 5.27 jobs per 1,000 people.

  • Startup early survival rate reflects the one-year survival rate for new firms. It ranged from 73.48 percent in Georgia to 88.13 percent in Maine, with a median of 79.1 percent.

    • Nationally, the startup early survival rate was 79.8 percent in 2017.

Read the full study here

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Findings:

  • The overall Kauffman Early-Stage Entrepreneurship (KESE) Index—a composite of four entrepreneurship indicators—ranged from -2.93 in Rhode Island to 2.86 in California, with a median of 0.01 across all 50 states and Washington D.C.

  • The national figure was 0.68, an increase from 0.50 in 2016 and 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.