Startups Are Making a Comeback in America
An index of startup activity surged after a steep post-recession decline.
Even though American politicians like to praise small business as the job-creating machine, research shows that it’s the startups that expand employment. These new entrepreneurs are now back on the rise, according to a report Thursday by Kauffman Foundation, which studies entrepreneurial activity.
The Kauffman Index of Startup Activity, which is an indicator of new business creation, had the biggest increase in 2015 over the past two decades, reflecting an increase in the share of new firms as well as more serious intentions behind the projects.
People in the recession began enterprises often because they lost a job and, for example, would start a consulting gig to put something on a resume while searching for real employment.
Kansas City-based Kauffman tracks why people start businesses, and in 2014, about 80 percent were driven by opportunities as opposed to necessity. That’s back to about the level seen in the decade prior to the recession.
“There is a broader return to normalcy in the economy,” said E.J. Reedy, director of research and policy at Kauffman. “People are following opportunities more. They are slightly less risk averse. During the height of the last recession, the run-up was more in people forced into entrepreneurship.”
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