KC makes big jump, Missouri ranks in top 10 of Kauffman startup index

The Kansas City metropolitan area was one of the biggest climbers in an annual index of startup activity released Thursday by the Ewing Marion Kauffman Foundation.

Kansas City ranked 18th of 40 metro areas in the Kauffman Index of Startup Activity, an annual report from the Kansas City-based Kauffman Foundation that offers a broad measure of startup activity.

St. Louis ranked 36th, moving up two spots from 2015 but still ranking near the bottom of the 40-city list.

Austin topped the list, followed by Miami, Los Angeles, San Francisco and Las Vegas.

A majority of metro areas and states across the country are seeing higher rates of business creation, according to the report.

The index weighs three factors: the rate of new entrepreneurs in an area; the percent of those entrepreneurs who decided to start a business because of “opportunity” rather than “necessity”; and the density of startups in an area.

Kansas City climbed 11 spots this year, good for the second-largest positive move of any city. The region improved in all three metrics the index considers. It ranked 17th for rate of new entrepreneurs (0.32 percent); 25th for the portion of those entrepreneurs who started businesses due to opportunity (77.7 percent); and 27th for startup density (77.9 per 1,000 businesses).

St. Louis also showed improvement in all three index categories. Its best ranking was 19th for startup density (86.1 per 1,000 businesses). The area was 32nd for rate of new entrepreneurs (0.22 percent) and 34th for percent of those who started businesses due to opportunity (70.8).

State rankings

Kauffman applied the same index to states, and Missouri ranked ninth among the country’s 25 largest states, improving one spot from last year.

The state had 88.3 startups per 1,000 businesses, good for No. 3 in startup density. Its share of founders who chose entrepreneurship due to opportunity was 83 percent, ranking fifth. Missouri ranked ninth for rate of new entrepreneurs (0.29 percent).

Texas, California, Florida, New York and Colorado were the top five of the index.

National index

This week’s release of metropolitan and state data follows Kauffman’s report earlier this month on startup activity for the U.S. as whole. That report showed the startup activity index rising for a second straight year, suggesting the U.S. was reaching pre-Recession levels of new business creation.

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