Maine Drops Two Spots in Kauffman Startup Activity Index

May 30, 2017

9:15 am

Maine has dropped two spots in the 2017 Kauffman Index of Startup Activity, an annual index that measures new business creation and startup density among the states and largest metro areas.

The index, a project of the Ewing Marion Kauffman Foundation, splits states into two cohorts of 25 based on population. Among the 25 smallest states in the country, Maine ranked in the bottom five at #21, a two-spot decline from its previous ranking of #19. In Maine’s cohort, Nevada was top in startup activity, followed by Oklahoma, Wyoming, Montana, and Idaho. Among all 50 states, the index places Maine at #39. The drop of two spots isn’t reason for alarm, according to the report.

“Compared to itself in the previous year, Maine’s entrepreneurial community is experiencing basically no changes in startup activity,” the report said.

Among the largest 25 states, the states with the highest startup activity were California, Texas, Florida, Arizona, and Colorado.

The Startup Activity Index includes three components to develop its rankings: rate of new entrepreneurs, which is the percentage of adults becoming entrepreneurs in a given month; opportunity share of new entrepreneurs, the percentage of new entrepreneurs driven primarily by market opportunities rather than economic necessity; and startup density, the rate at which businesses with employees are created in the economy. Here’s how Maine rated in each of these metrics:

Rate of New Entrepreneurs

Maine’s rate of new entrepreneurs in 2016 was 0.29 percent, which means that, on average, 290 people out of every 100,000 adults became entrepreneurs in Maine each month.

This component of the index is developed using data from the Current Population Survey, jointly produced by the U.S. Census Bureau and the U.S. Bureau of Labor Statistics. This rate of 0.29 percent has remained unchanged since 2014, when it fell from 0.34 percent in 2013.

Opportunity Share of New Entrepreneurs

Maine’s Opportunity Share of New Entrepreneurs was 75.22 percent in 2016, a drop from 77.68 percent in 2015 and 80.43 percent in 2014.

This component of the index also uses the Current Population Survey to measure the percent of new entrepreneurs who were not unemployed before starting their businesses.

Startup Density

Maine’s Startup Density was 62.8 in 2014 (the most recent year for which data is available), an increase from 60.8 in 2013, but still below 64.2 posted in 2012.

This component measures the number of startup firms (defined as firms less than a year old with at least one employee besides the owner) per 1,000 firm population.

The Kauffman Index has two other indices related to startup activity: main street entrepreneurship, which measures activity among businesses more than five years old with less than fifty employees, and growth entrepreneurship, which attempts to measure the pace of growth of a state’s startups — though those indices have not been updated since last year. In those two indices, though, Maine ranks #5 in main street entrepreneurship (again, among the 25 smallest states) and #19 in growth entrepreneurship.

Read more about the Maine startup ecosystem here on Tech.Co

The post Kauffman: Maine drops two spots in startup activity index appeared first on Maine Startups Insider.

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Whit Richardson is a former daily newspaper journalist in Portland, Maine, who has covered business and entrepreneurship for the past decade. He's founder of Maine Startups Insider and currently editor-in-chief of 4Front Publishing, an online news startup covering the nascent legal cannabis industry.

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