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Report on Factors that Boost Metro Startup and Growth Rates Dispels Myths, Emphasizes Importance of Education

February 3, 2014 Comments off

Report on Factors that Boost Metro Startup and Growth Rates Dispels Myths, Emphasizes Importance of Education
Source: Ewing Marion Kauffman Foundation

A Kauffman Foundation report being released today highlights the impact of education on rates of business startups and growth in metropolitan areas, while disputing the impact of certain factors that previously have been touted for their influence.

The paper, “Beyond Metropolitan Startup Rates: Regional Factors Associated with Startup Growth,” reports on entrepreneurship activity in 356 U.S. metros as examined from three angles: the startup rate for all industries, the startup rate for high-tech sectors and the rate for high-growth firms.

Contrary to the conclusions of most earlier studies, this regionally focused analysis found that the public sector can affect few significant factors to encourage entrepreneurship. For example, despite billions of dollars in government research expenditures, which widely are believed to trickle down to the private sector, area research universities and patents do not contribute to higher rates of entrepreneurship.

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How Cities Can Nurture Cultural Entrepreneurs

December 19, 2013 Comments off

How Cities Can Nurture Cultural Entrepreneurs
Source: Kauffmann Foundation

This paper, released a the first-ever Mayors Conference during Global Entrepreneurship Week 2013, discusses the importance of cultural entrepreneurs, particularly since the Great Recession. Author Ann Markusen of the University of Minnesota provides concrete steps that mayors and the public sector can follow to promote cultural entrepreneurship.

Economists and city planners increasingly have documented the roles artists play in local economies. As cities have better understood artists’ contributions to the metropolitan economic base – for example, by attracting cultural industry firms and bringing in income from outside the city through exports of books, recordings, visual art and other creations – their appreciation of and support for artists also have grown.

Noting that artists are many times more likely to be self-employed than are scientists and engineers, and that traditional policies and services don’t effectively support artists’ aspirations and occupational training needs, the paper offers seven strategies that mayors and city council members may champion to foster creative entrepreneurs:

  • Know who your local artists are.
  • Encourage convening and equipment-sharing artists’ centers.
  • Develop sustainable artist studio and live/work buildings.
  • Provide entrepreneurial training tailored to artists and designers.
  • Build networking and marketing opportunities for artists.
  • Embed artists in city development strategies.
  • Partner with local arts and policy faculty for entrepreneurial research and training.

New Engine/Kauffman Foundation research lists top 10 metro areas with highest tech startup density

August 14, 2013 Comments off

New Engine/Kauffman Foundation research lists top 10 metro areas with highest tech startup density
Source: Engine/Kauffman Foundation

High-tech startups are a key driver of job creation throughout the United States, according to research released today by technology policy coalition Engine and the Ewing Marion Kauffman Foundation. Though they start lean, new high-tech companies grow rapidly in the early years, adding thousands of jobs along the way. In fact, high-tech startup job creation is so robust that it more than makes up for the job destruction from early-stage businesses failures – a key distinction from the private sector as a whole where job losses from early-stage failures turns this group into net job destroyers.

Previous Kauffman research has shown that new and young firms are responsible for net job creation, not small businesses in general. This report contrasts business and job creation dynamics in the entire U.S. private sector with the innovative high-tech sector – defined here as the group of industries with very high shares of employees in the STEM fields of science, technology, engineering and math. These differences are highlighted at the national level, as well as detailing regions throughout the country where high-tech startups are being formed each year.

Number of U.S. Companies that Reach $100-Million in Annual Revenues Remarkably Stable Over Past 20 Years, According to Kauffman Paper

May 22, 2013 Comments off

Number of U.S. Companies that Reach $100-Million in Annual Revenues Remarkably Stable Over Past 20 Years, According to Kauffman Paper (PDF)

Source: Kauffman Foundation

The pace at which the United States produces $100-million companies has been stable over the last 20 years despite changes in the economy. However, according to a new Kauffman paper released today, the locations and sectors in which those companies are created are changing.

In the paper, "The Constant: Companies that Matter," Kauffman Foundation Senior Fellow Paul Kedrosky explores the rate and founding locations of companies in the United States that "matter" from 1980 to present.

Kedrosky uses three criteria to define companies that matter: They must be scalable, quickly reaching $100 million or more in revenues; they must be able to generate jobs quickly and broadly; and, they must be disproportionate creators of wealth, both directly through profits and salaries and indirectly through equity.

"Companies unable to reach $100 million in revenues are still relevant to the economy," Kedrosky says. "But the $100-million firms meet an entirely different threshold that gives cities, states and countries an even greater economic advantage."

Anywhere from 125 to 250 companies per year (out of roughly 552,000 new employer firms) are founded in the United States that reach $100 million in revenues. The largest contributors, in percentage terms, are from the consumer discretionary and industrials sectors. Taking into account sectoral contribution to U.S. GDP, the information technology sector produces more $100-million companies than might be expected.

Geographically, the most productive region in terms of $100-million company production is the U.S. southeast (Georgia, Florida, Kentucky, Louisiana) with the Pacific region (California, Oregon, Washington, Hawaii) coming in second. Following closely behind are the Mid-Atlantic and Central regions. Most regions are balanced with regard to sector, except for the Pacific region, which produces only slightly fewer $100-million information technology companies than the rest of the country combined, most of which are in California.

Learnings from Startup America Partnership’s first 18 months show networks and resources critical for startup growth should begin at the regional level

December 6, 2012 Comments off

Learnings from Startup America Partnership’s first 18 months show networks and resources critical for startup growth should begin at the regional level

Source: Ewing Marion Kauffman Foundation

How does a newly formed nonprofit organization tasked with helping entrepreneurs across America effectively serve startups that are in different places, in different industries and with wildly different needs? Region by region.

This is the central lesson found in "The Start Uprising," a white paper released today by the Ewing Marion Kauffman Foundation that examines where the Startup America Partnership started and where it is now. It is a story chock full of lessons for anyone interested in being a catalyst for entrepreneurship.

Launched at the White House in January 2011 as a demonstration project by the Kauffman Foundation and the Case Foundation, Startup America Partnership initially focused on helping entrepreneurs get their companies off the ground by delivering free or low-cost services and connecting them with large corporations.

By mid-2012, however, the initiative’s leaders had discovered that what startup entrepreneurs need most is the mentorship and fellowship of other entrepreneurs who can help them avoid missteps and point them toward customers, funders and talent. This learning shifted Startup America Partnership’s focus toward becoming the catalyst for a movement of entrepreneurs, by entrepreneurs, through startup regions.

"This paper sums up why a startup region strategy has become Startup America Partnership’s organizing principle, and how their experience can benefit any organization that wants to promote entrepreneurship," said Dane Stangler, director of research and policy at the Kauffman Foundation. "What Startup America Partnership seeks to achieve is critically important to America’s economic recovery and long-term prosperity. The more they can provide connections and resources locally that help startups grow faster, the more quickly these companies will become job creators."

Pivoting to regional hubs was a response to what the Startup America Partnership team learned was a lack of connectedness among entrepreneurs and is consistent with Kauffman research that challenged misconceptions about where high-growth companies start and what entrepreneurs need to succeed.

Then and Now: America’s New Immigrant Entrepreneurs, Part VII

November 20, 2012 Comments off

Then and Now: America’s New Immigrant Entrepreneurs, Part VII (PDF)
Source: Ewing Marion Kauffman Foundation

This study examined the complex relationships between immigration and economic development in an increasingly globalized economy. It sought to update the findings of the 2007 report by analyzing whether changes in the pace of immigrant entrepreneurship have occurred. Out of a total of 107,819 engineering and technology companies founded in the last six years, it examined a random sample of 1,882 companies to identify whether a key founder was foreign-born.

The study found that, for the first time in decades, the growth rate of immigrant-founded companies has stagnated, if not declined. In comparison with previous decades of increasing immigrant-led entrepreneurism, the last seven years has witnessed a flattening out of this trend. The proportion of immigrant-founded companies nationwide has dropped from 25.3 percent to 24.3 percent since 2005. While the margins of error of these numbers overlap, they nonetheless indicate that immigrant-founded companies’ dynamic period of expansion has come to an end.

We also performed a special analysis of Silicon Valley, which is widely known as the international hub for technological development and innovation. The findings indicate that 43.9 percent of Silicon Valley startups founded in the last seven years had at least one key founder who was an immigrant. This represents a notable drop in immigrant-founded companies since 2005, when 52.4 percent of Silicon Valley startups were immigrant-founded.

State economic development programs, which traditionally target high-tech firms, may be missing 75 percent of high-growth companies

September 19, 2012 Comments off

State economic development programs, which traditionally target high-tech firms, may be missing 75 percent of high-growth companies

Source: Ewing Marion Kauffman Foundation

Certain regions of the country continuously produce innovative, high-growth companies that have transcended the economic downturn of the last few years. Surprisingly, those regions include more than the expected locales like Boston and Silicon Valley.

"The Ascent of America’s High-Growth Companies," a report series released today by the Ewing Marion Kauffman Foundation, reveals that high numbers of fast-growing firms are concentrated in unexpected regions and industrial sectors.

"Our analysis of these fast-growing firms shows us that high-growth company founders can come from anywhere," said Dane Stangler, director of Research and Policy at the Kauffman Foundation. "Their firms can be found throughout the country and, rather than following the conventional expectation that high-growth companies are grouped into a narrow technology category, they represent exceptionally diverse industry segments. These findings offer important lessons for economic development leaders, such as to target firms that are high-growth rather than high-tech."

The study examined geographic trends of firms included in the 1982 to 2010 Inc. 500 lists to analyze for the first time how regional characteristics are associated with high-achieving companies and innovations. A survey of Inc. 500 founders from 2000 through 2008 also provided insight into the movement of these entrepreneurs from the cities of their alma maters to the locations where they founded their companies.

The first report in the series, "The Ascent of America’s High-Growth Companies: An Analysis of the Geography of Entrepreneurship," indicates that fast-growing Inc. firms encompass numerous industries beyond the sectors traditionally seen as the reserve of technology-based businesses.

While Silicon Valley, Austin, Texas, and other traditional high-tech hotbeds are well-represented among the cities that house high-growth companies, the research shows that Salt Lake City, Utah; Indianapolis, Ind.; Buffalo, N.Y., and several other Rust Belt icons also have accumulated a significant cache of Inc. 500 firms. The greatest number of Inc. firms is clustered in Washington, D.C., with nearly half of these firms operating in the government services sector.

The study also showed that spending growth in Washington, D.C., since the 1990s – regardless of which party held the White House – has fed the huge complex of fast-growing firms in the D.C. area. The growth of the private sector in the D.C. metro area, among the nation’s fastest-growing metro areas in the past two decades and the first to recover from the housing bubble in early 2009, then, ironically has deep ties to the federal government.

2010 Business Dynamics Statistics (BDS)

May 4, 2012 Comments off

2010 Business Dynamics Statistics (BDS)
Source: U.S. Census Bureau

This Census Bureau brief highlights the most recent update to the Business Dynamics Statistics, which found that U.S. business startups have been declining since the 1980s and especially during the 2008-2009 recession. The report concludes that the U.S. has become less entrepreneurial as a result of the decline in startups and the lack of activity by young businesses. The BDS, which provides annual statistics from 1976 to 2010 by firm age and size, is crucial to understanding current and historical U.S. entrepreneurial activity. The BDS results from collaboration between the U.S. Census Bureau’s Center for Economic Studies and the Ewing Marion Kauffman Foundation, the largest American nonprofit organization that focuses on entrepreneurship. Internet address: <http://www.kauffman.org/bds2012>.

Further information on the BDS release can be found at <http://www.census.gov/ces/dataproducts/bds/data.html>.

Kauffman Foundation task force offers incremental approaches to unlocking obstacles to efficient health care reform

April 23, 2012 Comments off
Source:  Ewing Marion Kauffman Foundation
Cost trends in U.S. health care consistently increase at about 2.5 percentage points faster than the general rate of inflation – clearly an unsustainable rate. To address what it called “America’s most urgent public policy problem,” the Ewing Marion Kauffman Foundation released a report at The Atlantic’s fourth annual Health Care Forum in Washington today that focuses on improving the cost-benefit balance in American health care through open access to medical data.
The report, “Valuing Health Care: Improving Productivity and Quality,”  is based on the recommendations of 31 experts from related fields, whom the Kauffman Foundation convened to reframe thinking around the question, “How can the productivity and value of American health care be increased, in both the short-term and long-term?”
While acknowledging that there’s no shortage of reports and recommendations for health care reform, the task force took a unique approach to tackling health care value and productivity challenges.
“Rather than look for a ‘one-shot-fix’ solution, the task force focused on incremental reforms that cumulatively can both reduce costs and enhance the value of health care delivered to Americans, regardless of whether and how the Affordable Care Act is implemented,” said Robert Litan, vice president of research and policy at the Kauffman Foundation and a task force co-organizer. “The underlying thread to the recommendations is leveraging big medical data.”

+ Full Report (PDF)

NFAP policy brief cites Kauffman-funded research that shows highly skilled immigrants could wait up to 70 years for a green card

October 6, 2011 Comments off

NFAP policy brief cites Kauffman-funded research that shows highly skilled immigrants could wait up to 70 years for a green card
Source: Ewing Marion Kauffman Foundation (National Foundation for American Policy)

The National Foundation for American Policy released a policy brief today that says international students who graduate from U.S. universities with advanced degrees in science, technology, engineering, or mathematics (STEM) should get a green card with their diplomas. The paper also says such a policy would significantly benefit U.S. competitiveness and the economy overall.

In “Keeping Talent in America” (PDF), the NFAP conducted research funded by the Ewing Marion Kauffman Foundation that shows a highly skilled Indian national sponsored today for the most common skilled employment-based immigrant visa could wait 70 years to receive a green card. The report addresses the need for STEM graduate talent and solutions to the backlog.

Starting Smaller; Staying Smaller: America’s Slow Leak in Job Creation

July 13, 2011 Comments off

Starting Smaller; Staying Smaller: America’s Slow Leak in Job Creation (PDF)
Source: Ewing Marion Kauffman Foundation
From press release:

Public discussion of the jobs shortfall in the United States has tended to focus on the Great Recession of 2007-2009, but new research released today by the Ewing Marion Kauffman Foundation suggests that the country faces a far more fundamental employment challenge that pre-dates the recession by many years: A long-term trend that the researchers call a slow jobs “leak.”

The new study, the next in a continuing series on firm formation and economic growth, found that the new businesses that continue to generate the bulk of the economy’s net job gains in recent years have been starting up with fewer workers than historic norms and are also adding fewer workers as they grow. Starting Smaller; Staying Smaller: America’s Slow Leak in Job Creation said its analysis of government data shows that since the middle of the last decade and perhaps longer, the growth path and survival rate of new businesses means they are generating fewer and fewer new jobs. The cohort of new firms that started in 2009, for example, is on course to contribute one million fewer jobs in the next decade than historical averages would suggest.

The study draws on data sources indicating a decline in the number of new “employer businesses,” those startups that create jobs for workers other than the owner. Citing data from the U.S. Census Bureau, the study found that the number of new employer businesses has fallen 27 percent since 2006. When including new employer businesses and newly self-employed workers, the level of startups has held steady or even edged up since the recession, according to the Kauffman Index of Entrepreneurial Activity. But that encouraging sign is somewhat misleading because firms that support only the self-employed owner do not scale to generate the new jobs needed to support overall economic growth.

The study also examined young companies’ size at birth, jobs created and survival patterns of new firms. They found that historically, new firms in the United States have generated about 3 million new jobs every year, but that recent cohorts have performed much worse, creating only 2.3 million jobs in 2009. At the level of individual businesses, one data series (BLS establishment data) showed that in the 1990s new establishments opened their doors with about 7.5 jobs on average, compared to 4.9 jobs today.

The study also found that as a group, recent cohorts of new businesses have been adding jobs at a slower pace than earlier cohorts even when they do well and grow, but that growth hasn’t made up for lower employment levels at inception.

Kauffman Fast Facts: Entrepreneurship and the Economy

July 3, 2011 Comments off

Kauffman Fast Facts: Entrepreneurship and the Economy (PDF)
Source: Ewing Marion Kauffman Foundation

From job growth and startup statistics to the impact of immigrants and state standings, the Foundation’s most compelling facts and figures are presented in this Fast Facts sheet.

Kauffman Index of Entreprenuerial Activity: 1996-2010

April 5, 2011 Comments off

Kauffman Index of Entreprenuerial Activity: 1996-2010
Source: Ewing Marion Kauffman Foundation
From press release:

During the Great Recession, more Americans have become entrepreneurs than at any time in the past 15 years. However, while the economy and its high unemployment rates may have pressed more individuals into business ownership, most of them are going it alone, rather than starting companies that employ others.

According to the “Kauffman Index of Entrepreneurial Activity,” a leading indicator of new business creation in the United States, 0.34 percent of American adults created a business per month in 2010, or 565,000 new businesses, a rate that remained consistent with 2009 and represents the highest level of entrepreneurship over the past decade and a half. In contrast, however, the quarterly employer firm rate has dropped from 0.13 percent in 2007 to 0.10 percent in 2010.

See also: interactive visuals

Kauffman Economic Outlook: A Quarterly Survey of Leading Economics Bloggers, First Quarter 2011

April 4, 2011 Comments off

Kauffman Economic Outlook: A Quarterly Survey of Leading Economics Bloggers, First Quarter 2011
Source: Ewing Marion Kauffman Foundation

After a year of increasing pessimism about the U.S. economy, the country’s top economics bloggers see a bit of hope on the horizon in 2011, according to a new Ewing Marion Kauffman Foundation survey released today. Although 77 percent continue to describe the economy’s overall condition as “mixed,” “facing recession” or “in recession,” 23 percent now believe the economy is “strong and growing” or “strong with uncertain growth” – an increase from last quarter.

With job growth an ongoing concern, bloggers this quarter were asked why high unemployment persists. An overwhelming 95 percent agreed that uncertainty is making firms reluctant to hire. They also cited structural changes in the demand for labor and a decline in aggregate demand. Asked whether they thought the recent extension of the 2001-3 tax cuts and the Social Security tax cuts would jump-start an economic recovery and job creation, a majority (66 percent) believe that those measures would be “effective” eventually, but not during 2011.

Survey respondents also took on the issue of the 2010 health reform bill. While opinions differed about whether it should remain or be repealed, seven out of 10 economics bloggers agreed that health benefits should be treated as taxable income.

+ Full Document (PDF)

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