Women drive startup activity higher for second straight year

Editor’s note: This post was republished with permission from the Ewing Marion Kauffman Foundation’s Policy Dialogue blog.

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

The rate of women entrepreneurs saw the biggest increase in almost twenty years—increasing from 0.22 percent to 0.26 percent (meaning 260 out of every 100,000 females become an entrepreneur each month). The gender gap is still fairly large though as men make up 59.4% of all new entrepreneurs.

Other key findings:

  • The Rate of New Entrepreneurs of 0.33 percent translates into approximately 550,000 new business owners each month during the year.
  • Female new entrepreneurs have a higher likelihood of being opportunity entrepreneurs than do their male counterparts, with 84.6 percent of the new female entrepreneurs in the 2016 Index not coming from unemployment, compared to 78 percent for males.
  • Immigrant entrepreneurs now account for 27.5 percent of all new entrepreneurs in the United States, up from just 13.3 percent in the 1997 Index.
  • New entrepreneurs in the United States are becoming increasingly diverse, with 40 percent of new entrepreneurs being comprised of African American, Latino, Asian, or other non-white entrepreneurs in the 2016 Index.
  • The aging of the U.S. population, combined with the increasing Rate of New Entrepreneurs among individuals aged fifty-five to sixty-four, have shifted this group from making up 14.8 percent of new entrepreneurs in the 1997 Index to 24.3 percent of all new entrepreneurs in the 2016 Index.

Download the full report and see related data visualizations and other reports at http://www.kauffman.org/microsites/kauffman-index.

Mark Marich, executive vice president of Global Entrepreneurship Week | Courtesy of the Ewing Marion Kauffman Foundation
Mark Marich

Mark Marich is the executive vice president of Global Entrepreneurship Week. Since 1998, Marich has provided communications leadership on several national initiatives and more than 100 public forums covering a wide range of policy issues, including: entrepreneurial growth and economic development, health care, renewable energy, telecommunications, regulatory reform and workforce development.

He is a regular contributor to the Ewing Marion Kauffman Foundation’s blogs, which are syndicated by Missouri Business Alert.

Find Marich on Twitter: @markmarich.

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