Kauffman: Startup activity reaches pre-recession levels

The Kauffman Foundation’s recently updated Index of Startup Activity finds that startup activity has increased for the third consecutive year and has now reached pre-recession levels. Nationally, the index, which measures business startup activity from 1997 to 2016, increased moderately after two years of sharp growth. Interactive data is available at both the state and metropolitan level. Among the 25 largest states, California, Texas, Florida, Arizona and Colorado, had the highest startup activity in 2017, while Oklahoma, Wyoming, Alaska, Montana and Nevada led among the 25 smaller states. Miami, Austin, Los Angeles, San Diego and Las Vegas were the metropolitan areas with the highest startup activity.

Now in its third year, the index is comprised of three equally weighted proxies:

• Rate of New Entrepreneurs, which measures the percentage of the U.S. adult population that became entrepreneurs, on average, in a given month;
• Opportunity Share of New Entrepreneurs, calculated as the percentage of new entrepreneurs driven primarily by "opportunity" vs. "necessity" – with necessity entrepreneurs defined as those who were previously unemployed and looking for a job; and,
• Startup Density, which is defined as the number of new employer businesses normalized by total business population.

The Kauffman Index of Startup Activity is one of three indices that comprise The Kauffman Index. Additional indices on Growth Entrepreneurship and Main Street Entrepreneurship are expected to be released in September and November 2017, respectively.