Indicators provide early-stage entrepreneurship data

This week, the Kauffman Foundation is introducing the new Kauffman Indicators of Early-Stage Entrepreneurship, which offers in-depth measures, reports, and interactive data on entrepreneurial activity across the United States.

The data set released allows those looking for actionable data to track changes in entrepreneurial activity during the last two decades from 1996-2017 across geographies and various demographic groups. The four indicators include:

Rate of new entrepreneurs: The broadest measure possible for business creation by population.
Opportunity share of new entrepreneurs: The percentage of new entrepreneurs who created a business out of choice instead of necessity.
Startup early job creation: The number of jobs created in the first year of business.
Startup early survival rate: The rate of survival in the first year of business.

Sameeksha Desai, director of Knowledge Creation and Research in Entrepreneurship, said for those trying to build, maintain, or improve their entrepreneurial ecosystems, the indicators start conversations that can be used in conjunction with traditional economic indicators to focus efforts.

“It gives a lot of nuance large, traditional indicators can’t always provide,” she said. “It doesn’t tell you what to do, but it can help you think about what next steps to investigate.”

For example, if the indicators reveal that a state has an exceptionally high rate of new startups, but low one-year survival, the question can be raised: What can be done to better support entrepreneurs in their first year?

“To look at each indicator by itself, but then also collectively, is really helpful,” Desai said. “As is the functionality to compare state by state.”

The debut of the Kauffman Indicators also marks the retirement of the Kauffman Index, as it emphasized rankings over data policymakers and others could use. Desai said the evolution to the new Kauffman Indicators came from the desire to provide more clear, actionable data, which focused on early-stage entrepreneurship – an approach inspired by input from policymakers, researchers, and other stakeholders.

“We felt there is value in providing greater nuance on early-stage entrepreneurship,” she said.

Plus, the time where we would consider the activity to be taking place is narrowed.

“Being able to get these one-year estimates is really important – because entrepreneurship is a living process, and things can look different over time.”

She added recognizing the diverse conditions of entrepreneurship is essential to provide more actionable measurement of early-stage entrepreneurship.

“This is one attempt – and we’re going to make more – to look at really early stage within the first year, because it is a very different type of animal,” Desai said. “We want to be able to understand, okay, how do these things look in a very specific way, because more in-depth conversations at the policy level about supporting early stage entrepreneurship will have long-term benefits in any given state or community.”

Notable findings from the national report:

• The Kauffman Early-Stage Entrepreneurship (KESE) Index showed the highest level of entrepreneurial activity recorded in the last two decades.
• There was a slight uptick in new entrepreneur rates from 2016 (0.31 percent) to 2017 (0.33 percent).
• Among new entrepreneurs, the share of immigrant entrepreneurship remains substantial. The rate of entrepreneurial starts among immigrant entrepreneurs in 2017 is double that of native-born entrepreneurs.
• The opportunity share of new entrepreneurs aged 55-64 years old increased from 15 percent in 1996 to 26 percent in 2017, yet the share of entrepreneurs aged 20-34 went down.
• Since 2012, the startup early survival rate has remained relatively constant between 79 and 80 percent.

Learn more about the Kauffman Indicators of Entrepreneurship >