HOUSTON—A majority of US states and metro areas are experiencing higher rates of new business creation, following the national trend, according to the 2016 Kauffman index of startup activity state and metro trends data released by the Ewing Marion Kauffman Foundation . Including Houston, ranked number seven, 23 out of the largest 40 metro areas experienced an increase in startup activity. “These reports are critical to solving the puzzle of why entrepreneurship thrives in some places and not in others,” said Victor Hwang , vice president of entrepreneurship at the Kauffman Foundation. “Policymakers, practitioners and entrepreneur support organizations can use the findings as tools to take the pulse of their local ecosystems to strengthen startup activity.” National startup activity rose in the 2016 index, continuing an upward trend started in 2015. After falling with the Great Recession and reaching its lowest point in the past two decades just two years ago, startup activity rebounded in 2016 to its fifth-highest level ever. “The startup numbers for states and metro areas dovetail with the national startup activity index report, which showed entrepreneurship recovering from the Great Recession slump,” said Arnobio Morelix , a senior research analyst and program officer at the Ewing Marion Kauffman Foundation. “While there is considerable variation from one locale to the next, the aggregate data bodes well for business startup activity around the country.” The Kauffman index of startup activity relies on three indicators to look at new business creation: the rate of new entrepreneurs in a location, calculated as the percentage of adults becoming entrepreneurs in a given month; the opportunity share of new entrepreneurs, calculated as the percentage of new entrepreneurs driven primarily by opportunity versus necessity; and startup density, the number of new employer businesses normalized by population. More specifically, the startup density is the ratio of the number of new employer businesses divided by the total population of existing employer businesses. Morelix tells GlobeSt.com: "Houston's rate of entrepreneurs didn't change but those who were unemployed turned into startups. Booms and busts result in new opportunities/startups and these opportunity-based businesses increased.” Morelix specializes in research and policy, and is a principal investigator on the Kauffman Index of Entrepreneurship. “With the Kauffman index of startup activity, the Kauffman Foundation provides the essential data and research that allow us to keep that pulse and leverage the insights we learn from the data to create a better future for our communities,” wrote Colorado governor John Hickenlooper in the report's foreword. “All entrepreneurship is local. And the policymakers, entrepreneurship supporters and communities that overlook this reality do so at their own peril.”

Instant Insights /

Index Ranks Houston Seventh for Startups

Related Stories

Recommended For You