To measure that, Kauffman released its first annual Growth Entrepreneurship Index in June, which measured the rate of growth in companies’ first five years, the share of scale-ups that reached at least 50 employees by year 10, and high-growth company density, or the number of private businesses with at least $2 million in annual revenue and three consecutive years of 20 percent annual revenue growth. The low end was represented by Pennsylvania, whose rate of 0.18 percent translates to 180 out of every 100,000 adults becoming entrepreneurs per month.
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Though Austin has landed at the top of plenty of lists over the years, this particular ranking thrilled the city’s civic leaders, who love an opportunity to one-up rivals for entrepreneurial talent, such as San Francisco and NY. The percent of adults who started businesses on a monthly basis, or new entrepreneurs, fell from 150 out of 100,000, or 0.15 percent a year ago, to 0.12 percent in 2016.
Orlando moved up significantly in the respected Kauffman index of startup company activity, jumping to No. 21 on the index for 2016, up from No. 33 the prior year.
“We’re really coming back from a low point and the Great Recession hangover”, said Arnobio Morelix, senior research analyst with the Kauffman Foundation. The metro area saw improvement in opportunity share of new entrepreneurs, rising from 79.67 percent to 82.57 percent. Startup density measures the startup firms per 1,000 firm population. “The reason we care about new firms is that they create jobs, wealth and opportunity for entrepreneurs and the people who work for them and the people who supply them with stuff”. It is joined this year by Miami, Los Angeles, San Francisco, and Las Vegas, which rank as the top five places for startups.
The Kauffman Index of Startup Activity is a measure of broad range startup activity across the United States and is an early indicator of new business creation.
Austin, Texas was the top city for startup activity, with a 0.6 percent rate of new entrepreneurs and a startup density of 105.2.
Of the top 15 metro areas on the Kauffman Index, four were in Texas.
“We often use “entrepreneurship” as one word but it’s really a chaotic process that includes starting, running and growing a business and they are all very different”, he said.
“We’re kind of getting a bad rap”, said Rebecca Harris, executive director of the Center for Women’s Entrepreneurship at Chatham University. Kauffman’s index was enhanced and expanded a year ago, but over the past decade the immigrant-rich Miami area typically has been in the top five nationally for new business creation. She said Texas is favorable to businesses from a tax perspective and that Austin offers a good quality of life and comparatively lower cost of living.
In 2012, the U.S. Census Bureau reported there were nearly 10 million women-owned businesses in the country and almost 90 percent had no employees other than the owner.
“We see startup activity higher for more than half of the 40 largest metros in the nation”, Morelix said. “It’s great to be on the list, but to be compared with New York City (ranked at 6th overall), I don’t think is a fair comparison”.
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“What’s driving this? “We are seeing a return of opportunity entrepreneurship in the USA, and that means businesses turning to entreprenship out of opportunity rather that necessity”, he said”.
