Creative Commons photo courtesy of Flickr user Laura Gilchrist.
Creative Commons photo courtesy of Flickr user Laura Gilchrist.

What’s the state of entrepreneurship in the U.S.? It’s complicated.

February 11, 2015  |  Bridgit Bowden  |  3 min read

On one hand, it’s a good time to be an entrepreneur. Venture capital and angel investment levels are back up to where they were in the late 1990s and early 2000s. Startup valuations are high. City and state governments are building more economic development strategies for entrepreneurs.

On the other hand, new business creation in the U.S. is down, and new firm survival rates have fallen increasingly for 25 years.

All of this data is included in a new report on the state of entrepreneurship, released today by the Ewing Marion Kauffman Foundation. (Full disclosure: The Ewing Marion Kauffman Foundation is a funder of KCPT and the Hale Center for Journalism.) Although the report doesn’t address the effects of entrepreneurship on the overall economy, it does analyze the peaks and pits of being an entrepreneur today.

Creative Commons photo courtesy of Flickr user Laura Gilchrist.

Creative Commons photo courtesy of Flickr user Laura Gilchrist.

The report was released today at an event hosted by the Kauffman Foundation in Washington D.C., where U.S. Secretary of Commerce Penny Pritzker and Small Business Administration administrator Maria Contreras-Sweet spoke.

The report identifies two groups of people and the opportunities and challenges they face: the millennials and the baby boomers.

“The boomers and millennials are well positioned to create new sources of entrepreneurial growth,” said Wendy Guillies, CEO and acting president of the Kauffman Foundation. “Our optimism, however, must be tempered.”

The report shows both generations are facing unique hurdles to starting businesses. For the millennials, it’s huge amounts of student debt. In many cases, millennials just can’t afford to start a business. For boomers, it’s the risk of starting a new venture at a certain age. Statistically, entrepreneurial activity falls off after age 55. A challenge facing both generations is the lack of startup funding.

“Access to capital is a major issue,” Guillies said. She said more than half of the new companies that applied for credit last year were turned down.

But Guillies said she’s hopeful about the future of entrepreneurship. She said pop culture indicators — like the popular television show “Shark Tank” and Mattel’s new entrepreneur Barbie doll — show entrepreneurship is trending.

Penny Pritzker is the U.S. Secretary of Commerce and has started five businesses. She said one of the keys to understanding how to help entrepreneurs succeed is by collecting more frequent and higher-quality data on entrepreneurs and their companies.

That’s the goal of a new partnership between Census bureau (which is part of the Department of Commerce) and the Kauffman Foundation, announced last month.

“Our entire administration wants to ensure that all of our entrepreneurs have the best opportunity to succeed — because startups are key sources of economic growth and job creation,” she said.

The program will conduct a survey of small business owners every year, instead of the current rate of every 5 years.

 

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