10 Facts That Will Change How You Think About Opportunity and Entrepreneurship
Who is turning to entrepreneurship and where they are launching their businesses may surprise you.
1. Startup activity is on the rise but the rate has declined.
2. People are choosing entrepreneurship for opportunity, not necessity.
3. There are more boomer entrepreneurs than millennials.
4. They are college graduates, not dropouts.
5. Female entrepreneurs have made gains, but there is still a long way to go.
6. Entrepreneurs are less likely to be white.
7. Entrepreneurs in America are more likely to be foreign born.
8. Entrepreneurs are less likely to be veterans.
9. It seems like there is a startup frenzy, but that isn’t the case.
10. The places with the most startup activity may surprise you.
When you hear the words startup founder, it’s likely that the image that comes to mind is that of a young, white man who lives in California or New York, favors casual wear and didn't finish college. New data from the Kauffman Foundation may have you thinking differently.
Every year, Kauffman releases a wide ranging body of research about the state of startup activity in the United States. The study looks at trends across cities and states and explores who -- by age, gender, race and even veteran status -- chooses to be an entrepreneur.
Read on for 10 facts about what entrepreneurship looks like now.
The data found that 75 percent of entrepreneurs are actually older than 34. The cohort of entrepreneurs aged 20 to 34 is on the decline. This group made up 34.3 percent of all new entrepreneurs in 1996, but in 2016 made up 24.4 percent of new entrepreneurs. Meanwhile, entrepreneurs ages 55 to 64 made up 14.83 percent of new entrepreneurs in 1996 and 25.5 percent in 2016.
In 2016, the rate of new male entrepreneurs was 0.39 percent (390 out of 100,000) and for women it was 0.23 percent (230 out of 100,000). However, for women, that rate has never gone above 0.26 percent -- it reached that level in 1996 and 2015. But in 2014, that figure for women was below 0.22 percent.
Progress has been incrementally made within the last couple of years even with the dip in 2016, but as ever, men are more likely to start businesses than women. In 1996, 56.33 percent of entrepreneurs were men and 43.67 percent were women. In 2016. 60.51 percent were men and only 39.49 percent were women.
Of course, the majority of startup founders are white and have been for the last two decades, but incrementally, black, Asian and Latino entrepreneurs have made gains since 1996.
Twenty years ago, 77.12 percent of new entrepreneurs were white, while in 2016 that figure dropped to 55.59 percent. From 1996 to 2016, the percentage of black entrepreneurs increased from 8.43 percent to 9.24 percent. Asian entrepreneurship went from 3.42 percent to 7.59 percent. Latino entrepreneurship went from 10 percent to 24.12 percent.
One of the metrics that the Kauffman Foundation uses to assess the state of entrepreneurship in the country is something called startup density. Kauffman defines it as “the number of startups per 1,000 employer businesses.” From 2015 to 2016, that figure went up from 81.6 startups per 1,000 employer businesses to 85.4. Even though there was an upward trend, overall, that figure is on the decline.From 2006 to 2014, startup density in the top 40 of the biggest metropolitan areas decreased on average by more than 20 percent. And overall startup density today is about 20 percent lower than it was before the Great Recession and has been on a long-term decline since the late 1970s.
Of the 25 largest states, California was number one for startup activity, followed by Texas, Florida, Arizona and Colorado. For the 25 smallest states, Nevada, Oklahoma, Wyoming, Montana and Idaho were at the top of the heap.
The biggest cities for startup activity were surprising as well. The top five were Miami; Austin, Texas; Los Angeles; San Diego, Calif.; and Las Vegas. The cities that have seen the biggest jump from last year were St. Louis, Cleveland and San Antonio, Texas. So clearly, you don’t just have to go to San Francisco or New York City to find a community of thriving entrepreneurs.