After A Long-Term Decline, Entrepreneurial Start-Ups Have Bounced Back

Contrary to what many reports have claimed has been a long-term decline in the number of new business start-ups, many investors believe otherwise.  Despite what these reports claim, they feel that entrepreneurial start-ups have made a comeback and that the growth in the number of these new start-ups has been significant.  According to the Kaufman Foundation Index on Start-up Activity (2015), there is a new upward trend to be aware of.  That trend has been the reversal of a 5-year decline in start-up growth.

Thanks to this report, investors now have a better understanding of the make-up of today’s entrepreneur.  There were several key statistics worthy of note:

• 5% of all new start-ups are owned by immigrants (immigrants are twice as likely to launch new start-ups as native-born Americans)
• 8% of all new start-ups in 2014 were female-owned (this figure is almost equal to the 20-year low that was revealed in the Kaufman index of 2008)
• 4% of successful entrepreneurs are over 45 years of age
• 6% of all new entrepreneurships were created out of a desire to do so, not out of necessity or need
• Approximately 40% of start-up capital is being financed by banks; less than 3% is from angel investors; and less than 1% is from venture capitalists

There were two additional index reports included in the Kaufman index relative to the ranking of metropolitan areas and states where start-up performance was concerned.  The consensus is that any angel investor should be concerned as to where their city and state were ranked in the index.  However, for those angel investors or venture capitalists who are trying to understand the overall start-up marketplace environment, The Kaufman Foundation Index contains a wealth of vital information.  Additional information regarding the current index can be found online.