Kauffman Report: KC Startups Taking Off



     U.S. business startup activity has taken a signficant turn for the better over the past year, and Kansas City is among the metropolitan areas right in the thick of that trend, the Kauffman Foundation said in a report issued this morning. In it, the foundation said that a majority of U.S. states and metro areas have seen rates of new business creation increase.

     Those findings were part of the 2016 Kauffman Index of Startup Activity State and Metro Trends. In it, the foundation said that 30 states saw higher aggregate levels of new business activity compared with the previous year.  Missing the boat on that trend were smaller states, which accounted for 11 of the 16 states that saw  year-over-year contraction. At the city level, 23 of the nation’s 40 largest metro areas experienced an increase in startup activity, and Kansas City jumped into the Top 20 on the list, up 11 spots from last year’s ranking of 29.

“These reports are critical to solving the puzzle of why entrepreneurship thrives in some places and not in others,” Victor Hwang, Kauffman’s vice president of Entrepreneurship, said in a news release announcing the findings.  “Policymakers, practitioners and entrepreneur support organizations can use the findings as tools to take the pulse of their local ecosystems to strengthen startup activity.”

“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 Kauffman senior research analyst. “While there is considerable variation from one locale to the next, the aggregate data bodes well for business startup activity around the country.”

The foundation said that the upward move in business startups began in 2015 and continues into this year, a welcome reversal from a trend that started with the Great Recession. In 2014, business formation reached  the lowest point recorded in 20 years, but it now stands at the fifth-highest level ever. The index determines rates of activity bsed on rate of new entrepreneurs in a location, the opportunity share of new entrepreneurs (as opposed to those going into business out of necessity), and startup density.

Texas, Florida, California, New York and Colorado topped the activty among the 25 states with the largest populations, and 19 of those states saw higher levels of startup activity in 2016. 

Kansas City trailed only Orlando (with a 12-spot jump in the rankings) among those with the biggeest movements on th list. Other areas with significant jumps were Nashville and Cincinnati (up seven spots each, to Nos. 16 and 24), and both San Francisco and Detroit, rising five spots each to No2. 4 and 30.

Interactive charts and state and top 40 metro area profiles are available here.