My name is Arnobio Morelix I'm a researcher
at the Kauffman Foundation.
The Kauffman Index is a set of indicators
that measure entrepreneurship activity at
the national, state, and metropolitan level.
We look at startup activity, main street entrepreneurship,
and growth entrepreneurship.
The Kauffman Index of Startup Activity measures
new firm formation.
One indicator is called the Rate of New Entrepreneurs,
which is the percent of adults that become
new entrepreneurs at a given month.
The Opportunity Share of New Entrepreneurs,
the second indicator, measures an estimate
of how many of those new entrepreneurs started
their businesses out of necessity versus opportunity.
We look at all the new entrepreneurs, and
if they were previously unemployed, we proxy
that as necessity entrepreneurship.
If they're doing something else, we measure
that as opportunity entrepreneurship.
The third indicator is Startup Density, it
calculates businesses that have at least one
employee, besides the owner, so they're employer
firms that are less than one year old.
Main Street entrepreneurship measures local
small business activity.
It looks at three specific indicators.
The rate of business owners, the survival
rates in the area, and established small businesses
density.
The rate of business owners is pretty simple.
You look at all the adults in the area, and
you calculate how many of them own a business
as their main job.
The survival rate measures how many businesses
take roots or establish in their community.
The third component looks at the businesses
that are both established and small.
And for our purposes, established means older
than five years and they have less than 50
employees.
For growth entrepreneurship, we measure entrepreneurial
growth activity through both revenue growth
and employment growth.
The first is the rate of startup growth, which
is how much businesses have grown in their
first five years of operation as measured
by employment.
The second indicator is the share of scale-ups,
which is the percent of businesses that started
small and grow to medium size or larger by
their tenth year.
The third indicator is high growth company
density.
It looks at private businesses with at least
two million dollars in revenue, and at least
20% annual growth for over three years.
Whenever the data is available, we look at
gender, age, educational background, racial
background, immigration status and veteran
status.
You can mix and match things however you want.
We do the best we can to have as many of the
combinations as possible so that people from
all over the country and the world can use
that data to understand entrepreneurship better
and make better decisions.
