Startup Activity on the Rebound, Annual Kauffman Index Reports

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More people are being drawn to entrepreneurship by opportunity than by necessity; the startup gender gap has narrowed. Despite the large short-term increases, entrepreneurship remains in long-term decline

Key measures of new business creation in the United States point upward for the second year in a row, according to the 2016 Kauffman Index of Startup Activity, released today.

The Startup Activity Index, a key annual indicator of new business creation, rose to 0.38 in 2016 – going up for the second year in a row – a mere two years after plunging to its lowest level in two decades.

“The latest Startup Activity Index data show entrepreneurship finally recovering, with new business creation reaching close to the peak preceding the Great Recession drop,” said Arnobio Morelix, senior research analyst at the Kauffman Foundation, which conducts the study. “Based on the increasing number of new entrepreneurs – the nation’s job-creation engine – the United States entrepreneurial economy has begun expanding. Recent job creation numbers by the Bureau of Labor Statistics also show this, with 889,000 jobs created by new establishments in the last quarter of 2015 alone – the highest job creation number by new establishments since early 2008.”

The Rate of New Entrepreneurs increased by more than 15 percent from two years ago, with approximately 330 out of every 100,000 adults becoming entrepreneurs each month during the latest year.

“The large increase in female entrepreneurs was a major driver in the rising startup activity levels,” said Robert Fairlie, professor at the University of California – Santa Cruz, and an author of the study. “Further, more people are pursuing entrepreneurship as an opportunity, rather than out of necessity; this is a big change from the levels of necessity entrepreneurship we saw during and after the Great Recession.”

“Understanding what is happening to our country’s startups and entrepreneurs is essential to any policymaker hoping to accelerate and expand on the recent progress we have seen in entrepreneurial activity,” said Senator David Vitter, chairman of the U.S. Senate Small Business Committee, who wrote the report’s foreword. “The Kauffman Foundation, through the Kauffman Index of Startup Activity and its many valuable initiatives, not only provides an important source of information for all of us who care about expanding entrepreneurship in America, but also puts into practice what their research tells us, as we work to help build the businesses of today and the bedrock of tomorrow’s economy.”

Along with the overall positive recent trend of the Index, certain underlying indicators still point to a long-term decline in startup density when compared to the levels of new business creation in the '80s, '90s and early 2000s.

The Kauffman Index of Startup Activity relies on three indicators to evaluate new business creation:

  • The Rate of New Entrepreneurs in the economy, calculated as the percentage of adults becoming entrepreneurs in a given month.
  • The Opportunity Share of New Entrepreneurs, calculated as the percentage of new entrepreneurs driven primarily by opportunity vs. necessity.
  • Startup Density, the ratio of the number of new employer businesses divided by the total population of existing employer businesses.

Learn more about the Kauffman Index of Startup Activity here. Follow the conversation on Twitter at #KauffmanIndex.

About the Kauffman Index of Startup Activity

The Kauffman Index of Startup Activity is an index measure of broad range startup activity across the United States and is an early indicator of new business creation. Rather than focusing on inputs, the Kauffman Index focuses primarily on entrepreneurial outputs – the actual results of entrepreneurial activity, such as new companies, business density and growth rates. The data presented in the Startup Index draws from a nationally representative sample size of more than half a million adults each year, and the universe of all employer businesses in the United States – covering approximately 5 million companies. The Startup Index is a unique measure of entrepreneurship because it is more timely and dynamic, excludes “casual” businesses and includes all types of business activity, regardless of industry.

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, Missouri, and has approximately $2 billion in assets. For more information, visit, and follow the Foundation on and

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