Are Fewer People Launching Startups?


America is a nation of startups—or that’s how the story goes, at least.

But is it true?

The Los Angeles Times is offering up some stats about the current state of the nation’s startups, and the findings aren’t pretty: As reported by the newspaper, data from the U.S. Census Bureau suggests that the number of new startups fell 28 percent between 1977 and 2011. Nor is that the only bad news for entrepreneurs: People aged 20 to 34—the so-called “Millennial” generation—were responsible for 22.7 percent of new companies in 2013, a decline from 34.8 percent in 1996.

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Even in Silicon Valley, the nation’s legendary hotbed of startup activity, the number of entrepreneurs striking out on their own seems lower than in past years. According to the Brookings Institution (again, as reported by the Times), 8 percent of the companies in San Francisco and San Jose were startups, a drop of 50 percent from 1980. “The first reaction of everyone who sees this is they can’t believe it, especially anyone from California,” Bob Litan, a senior fellow at Brookings, told the newspaper.

If accurate, the data seems to run contrary to the popular perception that entrepreneurship in America is at an all-time high. Venture capital flows into firms of all types; hiring is on the upswing in many states, suggesting that new companies are on the lookout for talent; the national unemployment rate is slowly ticking down from its Great Recession highs. More people are working, in other words; but maybe only a small percentage of those workers are devoting their energies to creating the next Facebook or Tesla.

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