Economic Impact of High-Growth Firms Highlighted in Latest Kauffman Foundation Policy Digest

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Digest offers insights on how to create fertile ground for growth

With labels like “gazelles,” “cheetahs” and “unicorns,” high-growth firms are a rare phenomenon in entrepreneurship that have a big impact on the economy. According to a new Entrepreneurship Policy Digest released today by the Ewing Marion Kauffman Foundation, given their outsized contributions to the economy, it is important to understand high-growth firms and how their impacts are measured.

The Digest highlights findings from the Kauffman Index of Growth Entrepreneurship, including the top 40 metro area high-growth business rankings, and these national trends:

  •     Growth entrepreneurship is increasing, though not at historic highs
  •     High-growth average employment growth rose
  •     High-tech is not a pre-requisite for high-growth; other sectors are growing too
  •     The number of high-growth firms varies within industries from year to year

High-growth firms expand to numerous locations and encourage employment growth, accounting for as much as 50 percent of new jobs created. The Policy Digest explains how defining high-growth businesses using firm attributes – venture capital funding and participation in accelerators – will capture different results than defining them by business performance metrics – revenue growth, employment and exits.

The Digest recommends these strategies to encourage an environment for growth entrepreneurship:

  •     Increase college completion rates
  •     Welcome and retain immigrant entrepreneurs
  •     Limit non-compete agreements

The Kauffman Foundation’s Policy Digests consist of summaries of findings around relevant policy issues that will inform and educate policymakers. To read the entire Policy Digest on high-growth firms and to sign up to receive subsequent Digests, go to http://www.kauffman.org/policydigest.

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About the Kauffman Foundation

The Ewing Marion Kauffman Foundation is a private, nonpartisan foundation that aims to foster economic independence by advancing educational achievement and entrepreneurial success. Founded by late entrepreneur and philanthropist Ewing Marion Kauffman, the Foundation is based in Kansas City, Mo., and has approximately $2 billion in assets. For more information, visit http://www.kauffman.org.

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John Eddy
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