Kauffman Foundation's Report Reveals Three Megatrends That Are Fundamentally Reshaping Entrepreneurship in America

"After a long Great Recession hangover, entrepreneurship is finally rebounding in the United States," the Ewing Marion Kauffman Foundation asserts in the opening paragraph of its 2017 state of entrepreneurship report, Zero Barriers: Three Mega Trends Shaping the Future of Entrepreneurship. Moreover, "Entrepreneurs are driving a resurgence of business activity in America—in new business creation, local small business activity, and the growth of small firms into larger businesses. But underneath this reassuring surface, turbulent shifts are shaping the future of entrepreneurship to be dramatically different than what it is today, or was in the past."

The report produced by the Kauffman Foundation, a Kansas City, Mo.-based organization whose mission is to help individuals attain economic independence by advancing educational achievement and entrepreneurial success, "reveals three mega trends that are fundamentally reshaping entrepreneurship in America:

1. New demographics of entrepreneurship: The U.S. is becoming more racially diverse, but entrepreneurs – 80.2 percent white and 64.5 percent male – do not reflect the changing population.
2. New map of entrepreneurship: Entrepreneurship is an increasingly urban phenomenon, and it is taking place in mid-sized metros and outside traditional hubs like Boston and Silicon Valley.
3. New nature of entrepreneurship: In the past, as companies grew their revenue, jobs would scale at almost the same pace. That's no longer true. Technology has made it possible for startups to grow revenue without as much hiring, and high-growth companies by revenue are not creating as many jobs as they did in the past."

The Kauffman Foundation provide details of a new initiative that will respond to these trends shaping entrepreneurship. "Zero Barriers to Startup" is a collaborative, nationwide effort that "will identify large and small barriers to new business creation to reverse the long-term decline in entrepreneurship. Along with entrepreneurs and policymakers, Kauffman will work to develop solutions and empower more entrepreneurs to pursue their ambitions."

The report concludes with a section titled "Areas for Further Work and Outstanding Questions," which presents several thought-provoking questions segmented in five sections about the future of entrepreneurship in the United States:

Demographics

• How is the aging of the U.S. population affecting—or not affecting—the long-term decline in entrepreneurial dynamism?
• What is causing market gaps? How can we measure them at scale? How can we address them? Which communities are doing best at addressing them
• Millennials start fewer businesses today than Boomers did when they were of the same age. Why is this happening? How can we address it?

Geography

• How new is the new map of entrepreneurship in the United States? How will it change in coming years?
• What makes ecosystems thrive?
• How can rural areas build entrepreneurship ecosystems?
• How can smaller metros build entrepreneurship ecosystems?

Technology

• How new is the new nature of entrepreneurship? Is the broken link of revenue scaling and job creation a new phenomenon—or a phenomenon at all? Is it a temporary or permanent state?
• How can we better prepare entrepreneurs and workers for the world of technological change?
• How is the nature of work changing?
• How can we increase the scale up potential of startups?

Education

• How do entrepreneurs best learn, and how can we support them more through building online and offline communities of learning?
• How can we address the major entrepreneurship gap between people with and without formal education?
• What is the role of a more educated United States on entrepreneurial activity?

Other

• What is behind the long-term decline in entrepreneurial dynamism?
• Failure rates could be big deterrents to business starts— especially for groups without strong personal safety nets. Would reducing the failure rates help? Would it encourage more people to start companies? Could a reduction in failure rates have an adverse effect on innovation and dynamism?
• How can we improve the safety net so that the consequences of business failure are not catastrophic for the entrepreneurs who take the leap? Would that even help? How could this affect different groups (e.g., women, minorities)?
• What is the role of regulatory inequality affecting different communities (e.g., minority, non-minority)? How does that affect the types of entrepreneurship the communities pursue?

The report's final paragraph correctly notes that "more questions will be raised as policymakers, entrepreneurship researchers, and support organizations work to eliminate barriers to starting up. The bigger questions will be in how to resolve the challenges. That is a job for all of us."

What are your thoughts about the report? Do you have any responses to the questions above?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.