Business Startups Ticking Up, Immigrant Entrepreneurs Growing

May 18, 2017

A recent gathering at the Sprint Accelerator in downtown Kansas City paired budding entrepreneurs with business mentors.
Credit Peggy Lowe / KCUR 89.3

The number of business start-ups has increased for the third consecutive year, according to the annual Kauffman Index of Startup Activity, and immigrant-owned businesses show strong growth.

The annual Kauffman Index, released Thursday, says first-generation immigrants make up 30 percent of all new U.S. entrepreneurs, reaching its highest level for just the second time in 20 years.

Some 86 percent of those businesses were created “to pursue opportunity rather than from necessity,” says Arnobio Morelix, a Kauffman senior research analyst. There are two reasons behind the growth, he says.

“Immigrants are about twice as likely as the native born to start a new company,” Morelix says, “and also the U.S. has seen a growing immigrant population in the past couple of decades.”

Overall, business startup activity grew slightly in 2016, reaching pre-Recession levels, the survey found.

Still, startup creation remains in a long-term decline when compared to the 1980s, Morelix says. He blames an aging U.S. population and “lower levels of business dynamism,” thanks to industry concentration, globalization and automation putting some companies out of business.

Kansas City also came out well in the Kauffman Index, moving up from number 19 last year to number 15 on the list of metropolitan areas with the highest startup activity. Morelix credits the increase to a connected community of entrepreneurs and the introduction of Google Fiber in 2011.  

“It’s not like the new bandwidth of the Internet changed the game,” he says. “What did change the game is, it brought people together and people got excited and they realized hey, there’s something happening here.”

Other findings from the survey include:

  • Missouri’s performance mostly stayed the same, dropping down one spot on the list of 25 of the largest U.S. states by population.
  • Kansas saw an increase in entrepreneurship, moving from No. 18 to No. 15 this year on the list of smaller states with the biggest positive shift in rank. “In some ways it’s catching up to itself because it had a pretty relevant drop a couple years ago,” Morelix says.

Peggy Lowe is KCUR's investigations editor. She's on Twitter @peggyllowe.