In the 2016 Kauffman Index: Startup Activity released Thursday, Austin, Texas, again ranked No 1. Following Miami at No. 2 were Los Angeles, San Francisco, Las Vegas, New York, Houston, San Jose, Denver and Phoenix. Kauffman’s data is industry-agnostic, so the businesses created range from high-growth tech startups to mom-and-pop shops and eateries and small service businesses in all industries. The Kauffman Foundation, based in Kansas City, develops and funds global research and programs in entrepreneurship.
Nationally, the key finding was that new-business activity was up for the second year in a row, said Arnobio Morelix, research analyst at the Kauffman Foundation and one of the study’s authors. “We as a country had reached the lowest level in two decades two years ago, so this second-year increase is very encouraging,” he said. The recession hit startup activity harder and the “Great Recession hangover” lasted much longer than for well-established companies, Morelix added.
What’s driving this bounce-back? “We are seeing a return of opportunity entrepreneurship in the U.S., and that means businesses turning to entrepreneurship out of opportunity rather that necessity,” he said. The share of opportunity entrepreneurship was 84 percent, up 10 percent from the low during the recession. In Miami, the opportunity share was 78 percent.
Also nationally, Kauffman saw a narrowing of the gender gap, “but it’s still too large,” Morelix said. Females starting new businesses were 40 percent of the total in the 2016 index. More minorities are also joining the entrepreneurship ranks, and four out of every 10 entrepreneurs were minorities in this year’s index.
As for state trends, Florida ranked seventh overall but second among the 25 largest states (Texas was first). Orlando ranked 21st, up from No. 33 a year ago and one of the fastest-growing cities for startup activity. Tampa Bay ranked 19th and Jacksonville ranked 28th.
In addition to the Startup Activity and Growth Entrepreneurship indexes, Kauffman also releases a Main Street Entrepreneurship Index. In that 2015 index released in December, the Miami-Fort Lauderdale metropolitan area ranked No. 6 in the nation for small business activity, but the report also showed the region’s businesses are getting smaller, and nearly two-thirds have fewer than five employees. Together, the three annual reports aim to give a picture of entrepreneurship creation, makeup and growth in the United States.
The new report, as well as the other indexes, are available at kauffmanindex.org.