How can I actually measure the entrepreneurial activity in my region? This is a question we at the Kauffman Foundation often hear from economic and policy leaders. As cities around the globe rally to foster entrepreneurship, the challenge of how to consistently measure and benchmark progress remains largely unanswered. While anecdotal evidence abounds, most ecosystems struggle to answer straightforward, yet often elusive, questions: How many new startups does our city or state have? How much are our ventures growing? How many of our businesses are surviving? To begin to answer these questions and address this challenge, we introduce the new Kauffman Index of Entrepreneurship, the first and largest index tracking entrepreneurship across city, state, and national levels for the United States. In this release, we introduce the Kauffman Index: Startup Activity—the first of various research installments under the umbrella of the new Kauffman Index of Entrepreneurship.
For the past ten years, the original Kauffman Index— authored by Robert W. Fairlie—has been an early indicator for entrepreneurship in the United States, used by entrepreneurs and policymakers, from the federal to state and local levels. The Kauffman Index also has been one of the most requested and far-reaching entrepreneurship indicators in the United States and, arguably, the world. In the policy world, the Index has been referenced in multiple testimonies to the U.S. Senate and House of Representatives, by U.S. Embassies and Consulates across various countries—including nations like Spain, Ukraine, and United Kingdom—by multiple federal agencies, by state governments and governors from fifteen states— from Arizona to New York—and by the White House's office of the President of the United States. On the academic side, more than 200 research papers quote the Kauffman Index. In media circles, the Kauffman Index has been highlighted in more than 100 media channels, including most major publications like The New York Times, The Wall Street Journal, TIME, CNN, the Financial Times, and Harvard Business Review. Originally, the Kauffman Index tracked one of the earliest measures of business creation: When and how many people first start working for themselves, becoming entrepreneurs. Now, we are expanding it to include other dimensions of entrepreneurship. The new and expanded Kauffman Index of Entrepreneurship 2015 remains focused primarily on entrepreneurial outcomes, as opposed to inputs. That means we are more concerned with actual results of entrepreneurial activity—things like new companies and growth rates.
The Kauffman Index: Startup Activity algorithm presented in this report takes into account three variables:
• Rate of New Entrepreneurs
• Opportunity Share of New Entrepreneurs
• Startup Density