Authors: Robert Fairlie and Sameeksha Desai

Suggested citation: Fairlie, Robert and Sameeksha Desai (2021) National Report on Early-Stage Entrepreneurship in the United States: 2020, Kauffman Indicators of Entrepreneurship, Ewing Marion Kauffman Foundation: Kansas City.

This is a report published by the Ewing Marion Kauffman Foundation utilizing content and data from multiple sources and external contributors. Every effort has been made to verify the accuracy of the information contained in this report and is believed to be correct as of the publication date. Nonetheless, this material is for informational purposes, and you are responsible for validating the applicability and accuracy of the information in any use you make of it.

This report presents four indicators tracking early-stage entrepreneurship for the years 1996-2020: rate of new entrepreneurs reflects the number of new entrepreneurs in a given month, opportunity share of new entrepreneurs is the percentage of new entrepreneurs who created their businesses out of opportunity instead of necessity, startup early job creation is the total number of jobs created by startups per capita, and startup early survival rate is the one-year average survival rate for new firms. National trends are reported for the four indicators as well as some demographic trends for the rate of new entrepreneurs and opportunity share of new entrepreneurs.

• Nationally, the rate of new entrepreneurs was 0.38 percent, meaning that an average of 380 out of every 100,000 adults became new entrepreneurs in a given month. The monthly rate increased substantially in 2020 as the economy went through the shutdowns, job losses, and reopenings that characterized the COVID-19 pandemic.
• The opportunity share of new entrepreneurs was 69.8 percent in 2020, representing a substantial drop from 2019 (86.9 percent). This opportunity share of new entrepreneurs is the lowest over the past 25 years and perhaps longer. The decline from 2019 to 2020 during the pandemic was 17.1 percentage points, much larger than the one-year decline of 6.9 percentage points from 2008 to 2009 during the Great Recession.
• National startup early job creation in 2020 was 5.0 jobs per capita, meaning that startups hired 5 jobs for every 1,000 people.
• The startup early survival rate was 78.1 percent in 2020, meaning that almost eight in 10 startups survived the first year. This survival rate was down substantially from the previous year, and it was the first drop in the survival rate since the Great Recession.
• The overall KESE Index – an equally-weighted composite of the four indicators – was -0.2 nationally. The index dropped substantially from 1.1 in 2019, recording the largest drop since the Great Recession. The index is normalized at zero.