Business

Latinos, immigrants fuel increase in startup creation, Kauffman study shows

Latinos and immigrants fueled an uptick in new business creation nationally, reversing a four-year downward cycle, according to the 2015 Kauffman Index: Startup Activity released on Thursday.

The entrepreneurial activity increase in the 2015 Index – which reversed the downward trend since 2010 – was the largest year-over-year increase in two decades, according to the research. Yet the rebound remains well below historical trends, Kauffman researchers said. In the 2015 Index, 310 out of 100,000 adults, or 0.31 percent, started new businesses each month, on average. In the 2014 Index, the average was 0.28 percent of the adult population.

“This rebound in entrepreneurial activity lines up with the strength we’ve seen in other economic indicators, and should generate hope for further economic expansion,” said Dane Stangler, vice president of Research and Policy at the Kauffman Foundation, in a news release. “But it’s important to view this short-term uptick in context of the bigger picture – we are still in a long-term decline of activity, which affects job creation, innovation and economic growth.”

Some findings, according to the research:

▪  While all racial and ethnic groups experienced increases in the rate of new entrepreneurs between the 2014 Index and the 2015 Index, the Latino share of all new entrepreneurs rose from 10.0 percent in 1996 to 20.4 percent in 2013 to 22.1 percent in 2014.

▪  Kauffman researchers said 28.5 percent of all new entrepreneurs are immigrants in the 2015 Index, compared to 13.3 percent in the 1997 Index and that immigrants are starting new businesses at nearly twice the rate of native-born Americans, creating an average of 520 businesses a month per 100,000 people last year.

▪  Most new entrepreneurs, or 63.2 percent, were men. The 36.8 percent of females who became entrepreneurs in the 2015 Index is close to the two-decade low of 36.3 percent in the 2008 Kauffman Index.

▪  Opportunity entrepreneurs, those who were not unemployed and not looking for a job before they started new ventures, was 79.6 percent of the total number of new entrepreneurs. This represented an uptick over the 2014 Index, and was substantially higher than in the 2010 Index, when the number of opportunity entrepreneurs was at the lowest rate since the Kauffman Foundation began collecting this data in 1996.

▪  Startup density (the number of new employer businesses by total population) increased from 128.8, or 128.8 for every 100,000 people, to 130.6 in the Startup Activity calculations from 2014 to 2015. Startup density is climbing, but it remains well below typical historical rates, the report said.

State and metropolitan data will be released June 4. Find the report on national findings here: www.kauffmanindex.org.

Follow Nancy Dahlberg on Twitter @ndahlberg.

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