U.S. startup activity jumped 15 percent over the past two years, led by growth among women, millennials and minorities, according to a just-out report from the Kauffman Foundation, which has been tracking entrepreneurial activity for two decades.
That translates to about 550,000 new companies per month, the fifth-highest rate ever recorded by the widely watched index. The country notched its lowest level of entrepreneurial activity just two years ago, the report said.
“This is very encouraging, but we are still below our prerecession peak,” said Arnobio Morelix, the senior research analyst at the foundation.
Women are leading the surge. They now make up 40.6 percent of new entrepreneurs, “the highest level we have seen since 1996, and pretty significant,” Morelix said.
Women were also much more likely to become “opportunity entrepreneurs” than their male counterparts, meaning they launched a business because they saw an opportunity in the marketplace, and were not forced into it by loss of a job, as is more common among men.
Eighty-five percent of new women entrepreneurs were launching their companies due to opportunity in the market, compared with 78 percent for men. Overall, 84 percent of new entrepreneurs are considered opportunity-driven, or more than 10 percentage points higher than during the Great Recession.
The report also finds Latino entrepreneurs have “risen dramatically,” more than doubling since 1996 to almost 21 percent of all new entrepreneurs.
Immigrants are also twice as likely as native-born Americans to launch businesses in this year’s index.
Another promising sign: Activity among younger entrepreneurs in the 20 to 34 and 35 to 44 age groups has increased since 2015. However, both groups show startup levels below what they were when the index began, indicating that younger people are still struggling to take the entrepreneurial leap.
Chief among them: Student debt, which affects a young entrepreneur’s cash flow, equity-building capacity and ability to get loans compared to other generations, according to Morelix.
“These are fundamental factors impacting entrepreneurship among young people.”