We’re number one!
We’re number one!
We’re number one!
Oh, sorry, I was too busy celebrating the fact that the LA/Orange County area has the most entrepreneurs per 100,000 people out of any metropolitan area in the United States. That’s right, suck it, Bay Area!
A couple of days ago, the Kauffman Foundation released its yearly “Kauffman Index of Entrepreneurial Activity” study. It’s basically a yearly tally on how many new businesses are formed and who is forming them. 2010 saw the most entrepreneurship activity in the last 15 years, with 565,000 new businesses created each month. However, a greater percentage of these new businesses were sole-proprietorships, meaning that more startups were avoiding having to hire employees for their company.
Carl Schramm, president and CEO of the Kauffman Foundation, explains:
“Since it began, the recession has triggered annual declines in the rate of employer enterprise births. Far too many founders are choosing jobless entrepreneurship, preferring to remain self-employed or to avoid assuming the economic responsibility of hiring employees. This trend, if it continues, could have both short- and long-term impacts on economic growth and job creation.”
It makes sense given the recent state of the economy, but if these sole-proprietorship companies become successful, they’ll inevitably grow their payrolls.
Of the 15 biggest metropolitan areas, Los Angeles had the highest rate of entrepreneurs with 620 per 100,000 adults while Philadelphia was dead last at 150 entrepreneurs per 100,000 adults. Keep in mind that these numbers include all walks of entrepreneurs, not just tech-focused ones. It might explain why the San Francisco area ranks under Houston and Atlanta as well.
It would have been nice if the report gave a more detailed breakdown on the industries being represented by these startups. I’m sure LA would have a disproportionately large number of food trucks compared to other areas. Unfortunately, the report only breaks down industries into “construction, manufacturing, trade, services, and other.”
If you like reading 28-page reports with lots of data tables, feel free to read the entire report here (PDF). Otherwise here are some of the other key takeways from it:
- The immigrant rate of entrepreneurial activity increased substantially – from 0.51 percent in 2009 to 0.62 percent in 2010 – and declined slightly for the native-born. This increase expanded the large positive gap that already existed between immigrant and native-born entrepreneurial activity rates.
- A growing immigrant population and rising entrepreneurship rate contributed to a rise in the share of new entrepreneurs that are immigrant, from 13.4 percent in 1996 to 29.5 percent in 2010.
- Entrepreneurial activity increased slightly for men and decreased slightly for women. For men, the entrepreneurial activity rate increased from 0.43 percent in 2009 to 0.44 percent in 2010. The female entrepreneurship rate decreased from 0.25 percent to 0.24 percent.
- The African-American entrepreneurial activity rate decreased from 0.27 percent in 2009 to 0.24 percent in 2010. The white entrepreneurial activity rate decreased from 0.33 percent to 0.31 percent.
- The entrepreneurship index was highest among the least-educated group, moving from 0.49 percent in 2009 to 0.59 percent in 2010, suggesting an increased number of people entering entrepreneurship out of necessity. The largest decrease in entrepreneurial activity occurred for high school graduates.