Nearly 500,000 New Businesses Launched Monthly

Report includes state-by-state breakdown of entrepreneurial activity with Midwest and West having highest rates

(KANSAS CITY, Mo.), April 24, 2008 – The rate of entrepreneurial activity among women dropped sharply in 2007 while the activity rate among men and immigrants surged, according to a national assessment of entrepreneurial activity by the Ewing Marion Kauffman Foundation.

According to the Kauffman Index of Entrepreneurial Activity, the only annual study to measure business startup activity for the entire United States adult population at the individual owner level, 495,000 new businesses per month were started in 2007 with 0.30 percent of the adult population (or 300 out of 100,000 adults) involved in the startup process. This entrepreneurial activity rate is a slight increase over the 2006 rate of 0.29 percent.

"At a time when the nation is concerned about the economy, it is heartening to see that entrepreneurial activity continues to rise," said Carl Schramm, president and chief executive officer of the Ewing Marion Kauffman Foundation. "The entrepreneurial sector is a critical factor in our nation's economic growth. Even during times of recession, new firms have been responsible for the bulk of new jobs and innovations in America. That is why it is vital to track startup trends like we track other economic indicators."

Several surprising findings from the Kauffman Index are:

• Immigrants far outpaced native-born Americans in entrepreneurial activity, increasing from 0.37 percent in 2006 to 0.46 percent in 2007. Immigrants are now substantially more likely to start businesses than are native-born Americans, which remained constant at 0.27 percent.  
• Men are now twice as likely as women to start a business each month, a larger differential than in any previous year of the KIEA study. For men, the entrepreneurial activity rate increased from 0.35 percent in 2006 to 0.41 percent in 2007. The rate decreased from 0.23 percent to 0.20 percent for women.  
• The entrepreneurial activity rate among Latinos increased from 0.33 percent in 2006 to 0.40 percent in 2007, the largest increase for any major ethnic or racial group.

"The Kauffman Index of Entrepreneurial Activity remains the only study of its kind that provides states with some measurement for how their rate of business startups compare to the nation. Covering the past 12 years, this report has become an important tool for state and national economic leaders to gauge progress," said Robert W. Fairlie, professor of economics at the University of California, Santa Cruz, who developed the Kauffman Index.