Number of New Ventures in the U.S. Stalled – Business Dynamics Briefings

The number of startups in the U.S. – new employer firms less than one-year old – has declined in the 2013, the latest year with Census data available. And while we have experienced some increases in the number of startups since the recession, new firm creation has been relatively stable and stalled.

A recent Wall Street Journal piece covered an analysis I did with the latest Business Dynamics Statistics data from the Census. In this post, I will share some of that analysis and include interactive data visualizations on the topic.

Stalled Number of New Firms

After a nadir in 2010 and two years of consecutive increases in the number of startups, this stalling and slight decline this year is somewhat of a cold bath for those of us who thought the number of startups in the U.S. would continue on an upward trajectory.

Based on a conversation with my colleague EJ Reedy, we wondered if – in the context of long-term decline in entrepreneurship dynamism – the new lower levels of startups could be a new normal for the U.S.

Below are versions of the graphs Wall Street Journal published from my analysis. I add some of them below in three different takeaways from the data.

Three Takeaways

  • Most states have less startups in 2013 than in 2012

Only 11 states and Washington, D.C. experienced an increase in new firm creation in 2013, compared to 2012. Missouri had the biggest increase.

  • Net job creation by startups is down

Startups and young firms 5 years-old or less are and continue to be the biggest source of net job creation in the economy. However, net job creation from startups is down in 2013.

  • Decline in startups common across sectors, with one exception

Every sector except the exception of finance, insurance, and real estate has experienced a decline in the number of startups from 2013 to 2012.

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