Start-Up Activity Now HIGHER Than It Was During The Dotcom Boom (CHART)

Despite, or perhaps because of, the recession, U.S. entrepreneurial activity is at its highest rate in 14 years. And yes, that includes the tech boom period of 1999-2001.

According to the Kauffman Index of Entrepreneurial Activity, 558,000 new businesses were created each month month last year, representing a 4% increase over 2008. This rate has been steadily growing for the last 4 years, with a spike between 2007-2008.

"Challenging economic times can serve as a motivational boost to individuals who have been laid-off to become their own employers and future job creators,"said Carl Schramm, president and CEO of the Kauffman Foundation. "Because entrepreneurs drive the economy, the growth in 2009 business startups is encouraging and hopefully points to a hopeful trend in terms of our economic recovery."

No surprise then that in a January 2010 report by outplacement firm Challenger, Gray and Christmas, jobless managers and executives accounted for the most start-up activity in four years.

That sentiment might explain why Bloomberg and FirstMark Capital LLC, a private equity firm, have earmarked $22 million for New York-based technology start-ups.

Check out how entrepreneurial activity has done through the years.

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Source: St. Louis Federal Reserve

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Source: St. Louis Federal Reserve

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Comments

[SpoooonBK]

10:41 AM on 06/03/2010

This is called hustling. Since people can't find jobs they might as well try to get money somehow.

[Grand Supercycle]

03:39 AM on 05/29/2010

Be careful folks.
The big picture chart of the DOW and SP500 reveals all...
http://stockmarket618.wordpress.com

[santiago sherwood]

01:51 PM on 05/28/2010

un funded startups by people whose unemployment ran out.

[SoCalNick]

01:01 PM on 05/28/2010

NON STORY

These " Start-ups" are simply desperate people with no funding trying to find a way to make some Cash. I get calls from them every week looking for Sr. Execs willing to work for free to help them with a promise of a " POSSIBLE" Payout IF they make it.

That is all

[azhermit]

05:48 PM on 05/27/2010

feel good propaganda.

[Fastwriter]

02:07 PM on 05/27/2010

I'm not surprised, the GOP and pundits are taking America down with their BS.

[billw8017]

12:53 AM on 05/27/2010

Big corporations with effective monopolies tend to raise prices and lay off workers when the economy slips, giving the economy a nasty kick and depressing it further. Once upon a time, young people would go home to the farm when a recession or "panic" struck. There aren't so many families on farms these days.

The real hope of our economy is those people who are applying hundreds at a time for jobs openings in the dozens. As they might succeed, they make a pressure for recovery. Their enterprise probably also takes other forms. In the worst of times, more may rely on the "underground" economy and start businesses that set them up better for the good times -- when they can show a good face and a good reputation and take some of the good paying factory jobs.

[heymack]

05:33 PM on 05/26/2010

That graph is about as dull as you can get, it really shows nothing but an almost flat line....they need a different graphic to make their point.

[RTIII]

06:33 PM on 05/26/2010

There are 8 graphics.

[heymack]

07:42 PM on 05/26/2010

lol. I know...I was just being snarky. ;)

[planetjeffy]

04:19 PM on 05/26/2010

I do internet marketing for all kinds of businesses. I'm working with many people who have either quit the job they hate or got laid off - starting a new business. The economic collapse will ultimately be a big boon for the economy as it pushes us into new technologies and new ways of doing business.

[billw8017]

01:03 AM on 05/27/2010

Tech does well in recessions. The broadcasting industry was one industry that prospered in the 1930s. Sub contractors may be advantaged as businesses try to increase production without increasing commitment. A really bad idea is tax subsidies and state support which often just eats up tax income faster and more expensively than if you just blew it out the window. Often it works out as 100k s per job or $millions. Labor doesn't have to commit to a region if other regions have practical advantages for businesses, but the bidding comes out of their pockets.

[Ror Wolfe]

05:32 PM on 06/11/2010

That is true; although today it's no longer just tech but "high tech" such as nano. And capital is also available. Issue is how to attract the right conditions which today are of course no longer what they used to be in the hay days of the boom. But there are aggregators out there such as Esolvenano ( http://esolvenano.com/about/ )

[John Cunningham Bowler]

04:02 PM on 05/26/2010

Interesting, Kauffman aren't very forthcoming on their methodology. It apparently involves downloading the various states business name database every month and seeing which of the new businesses have owners that did not appear in the previous month (this is a guess, because they don't say.)

It costs $50 to register a business in Oregon (if you do it online.) I wonder how many people are losing their jobs then being hired back as contractors? It's a scam I've seen before when companies feel they have to reduce employee count but know that they need the employees to actually do the job...

[weekendpartier]

10:33 AM on 05/29/2010

THAT's IT: 50 dollars to register a business!!! IN NJ, I registered my landscaping business as a LLC - that cost me 125 dollars, and I'm still not licensed! To get my license, the application is longer and will cost me 95 dollars per year! My liability insurance cost me 800 per year (I am small) and yet I still hear rich yuppies bitch about 75 dollar gutter job, or a 300 clean up job! And, that doesn't even include the costs of my equipment, truck, gas, oil, truck insurance, etc, etc.

[batmancw]

03:15 PM on 05/26/2010

Well, this is what happens when there are 6-100 people applying for every ONE job opening.

Best wishes to all of my fellow entrepreneurs--particularly the new ones!
It takes guts, hard work and perseverance to start your own business in ANY environment, and I think that is particularly true NOW.

[ZiloRS]

03:11 PM on 05/26/2010

I thought this might happen. Hopefully this new wave of business owners will learn to treat their employees better and steal the best ones from established companies.

[HWNA]

02:19 PM on 05/26/2010

But I thought Obama's gub'ment was keeping people from starting businesses?

[Nate Carter]

03:07 PM on 05/26/2010

that's what a teabagger would have you believe

[teasley]

03:29 PM on 05/26/2010

These are people who most likely had no intention of starting their own companies.There are no jobs, people are desperate for income so they risk what little they have to start a business, which most likely will fail ( if you don't believe me, check the failure rate of new businesses in any economic climate) I hardly think unemployed people starting bussinesses out of desperation is anything to be proud of.

[batmancw]

04:32 PM on 05/26/2010

Too true. I believe the stats are that 80% of all new businesses fail within the first 2-3 years, and of the remaining 20%--80% of them will fail before they hit the 10 year mark.

At least, that was the stats a few years back. I suspect the failure rate is even higher now because the banks still aren't lending enough to small businesses.

[HWNA]

05:06 PM on 05/26/2010

While it is interesting that you would rather have people engaged in wage slavery, I find it admirable when a person starts a business in any business climate - especially one as tough as today.

[deezus]

02:13 PM on 05/26/2010

Great... another bubble that will burst and screw our economy over even more.

[gavrielle]

02:55 PM on 05/26/2010

It's not a dot com tech bubble full of money hungry investors, it's all those people who can't find jobs creating solid businesses that will earn them money. My niece, who lost her job last year opened a cleaning service a few months ago which now employs several people and gives her a base income of $2,000 a month. It's not much, but she can pay all her bills and buy food - and so can some of her friends now. A friend who used to be in real estate opened a landscaping business out of his home. He's making enough to pay his mortgage and keep his health insurance payments up.

I could list at least half a dozen other business start ups that aren't likely to go bust any time soon. The fact that people have left the corporate world behind and are striking out on their own is a good thing. Most especially, because they can now hope to give their employees health insurance at reasonable rates. This is the way the world used to be, before the corporations got all the power. Small businesses run by families and neighborhood folks who could compete for the best employees because they could also afford to offer health insurance.

And somewhere in there will be the next big innovation that will create something the world realizes it just can't live without, because that's what happens when real brilliance is unshackled from the stifling atmosphere of the corporate office.

[jlyn]

03:40 PM on 05/26/2010

Well said, well reasoned, and spot on. You are F&F'd.

[kudzumaster]

04:26 PM on 05/26/2010

Fanned. ^_^

[higherstrategy]

01:58 PM on 05/26/2010

HOW?

Banks Cut Lending AGAIN!

Nothing But LIES out of Wall Street/Banks/FED

[SlinkyTWF]

02:08 PM on 05/26/2010

It doesn't say how many of those 558,000 businesses have already failed or do not generate enough revenue to help stimulate the overall economy by creating jobs.

[gavrielle]

09:39 PM on 05/26/2010

You don't always need a bank to loan you money to start a business. Sometimes, it only takes a bit of hard work, a few friends chipping in a few hundred dollars and whatever you've got in your garage.

[Insider1]

04:55 PM on 05/29/2010

How's that new electric car coming? BTW, have you seen my lawnmower?

[Candy Molly]

10:02 AM on 05/30/2010

exactly!