National Report on Early-Stage Entrepreneurship in the United States (2021)

The Kauffman Indicators of Early-Stage Entrepreneurship is a set of measures that represents new business creation in the United States, integrating several high-quality, timely sources of information on early-stage entrepreneurship.

This report represents four indicators that track early-stage entrepreneurship for the years 1996-2021: rate of new entrepreneurs reflects the number of new entrepreneurs in a given month, opportunity share of new entrepreneurs is the percentage of new entrepreneurs who created their businesses out of opportunity instead of necessity, startup early job creation is the total number of jobs created by startups per capita, and startup early survival rate is the one-year average survival rate for new firms. We report national trends for the four indicators as well as some demographic trends for the rate of new entrepreneurs and opportunity share of new entrepreneurs.

The rate of new entrepreneurs was lower in 2021 than 2020 but higher than in pre-pandemic 2019, reflecting more transitions into entrepreneurial activity, broadly defined, among the population during pandemic conditions. At the same time, the opportunity share of this activity increased from 2000 when it was at its lowest level in the last 25 years, indicating that many of these transitions were undertaken by people with few other options for economic engagement.

The rebound from the widespread economic damage of the COVID-19 pandemic showed up through a partial return to pre-pandemic levels in both new entrepreneurial activity and the opportunity share of new entrepreneurs.

Report Highlights

Nationally, the rate of new entrepreneurs in 2021 was 0.36 percent, meaning that an average of 360 out of every 100,000 adults became new entrepreneurs in a given month. The monthly rate increased substantially from 2019 to 2020 as the economy went through the shutdowns, job losses, and re-openings that characterized the early stages of the COVID-19 pandemic, and has only partly returned to pre-pandemic levels.
The opportunity share of new entrepreneurs rebounded substantially to 80.9 percent from its low of 69.8 percent in 2020, but remained much lower than its pre-pandemic level of 86.9 percent in 2019. The decline from 2019 to 2020 during the first year of the pandemic was 17.1 percentage points, which is much larger than the one-year decline of 6.9 percentage points from 2008 to 2009 during the Great Recession.
Startup early job creation in 2021 was 4.7 jobs per capita, defined here as startups hired 4.7 jobs for every 1,000 people. Startup job creation was down from pre-pandemic levels.
The startup early survival rate was 81.7 percent in 2021, reflecting an increase from 2020 as the economy improved.