Startup fever has apparently reached an all-time high–and not only on business school campuses.
The 2014 Global Entrepreneurship Monitor U.S. Report yesterday (Sept. 2) found that 14%, or about 24 million working-aged Americans are entrepreneurs. It is the highest rate of entrepreneurship ever recorded in the 16 years of the study sponsored by Babson College and Baruch College’s Zicklin School of Business.
Also for the first time in the report’s history, more than half (51%) of the American population believes “there are good opportunities around them for starting businesses”–a sure sign that more would-be entrepreneurs are likely to take the leap in the near future. It helps, too, that entrepreneurial fear of failure decreased by two percentage points to 30% from an all-time high of 32% in 2012.
Babson College professor Donna Kelley attributes the uptick to a myriad reasons—one of them being America’s favorable cultural views of such figures as Facebook’s Mark Zuckerberg and the late Apple founder Steve Jobs. “Entrepreneurs are like celebrities in the United States,” Kelley says, attracting the lavish attention that is more customarily bestowed by the public on actors, rock stars, and pioneering scientists.
‘A BOOM ECONOMY MAKES EVERYONE THINK THEY ARE SMART’
The report also found that 76% of media reports about entrepreneurship are positive. Vince Ponzo, director of Columbia Business School’s Eugene Lang Entrepreneurship Center, agrees that positive attention is one aspect of a perfect storm of factors leading to the entrepreneurial influx. “From an operational standpoint, it’s never been easier to start a business,” he claims. Ponzo rattles off access to software, tools, and the cloud, easier access to venture capital money, and social media and the ability to recruit top talent as operational examples.
“A boom economy makes everyone think they are smart,” he adds. “The acceptance of mainstream media and a culture of entrepreneurs makes entrepreneurship perceived as being sexy and the cool thing to do.”
The report does show a heightened level of confidence. Of the country’s entrepreneurs, 36% believe they have a product, service, or idea that no one else has. Meanwhile, the 28 other countries with innovation-driven economies have an average of 31% that believe the same. Kelley sees the confidence from investors as well. “They (investors) are back in full-force now, compared to where they were in 2009 through 2011,” she explains.
ENTREPRENEURS GETTING YOUNGER (AND OLDER)
The age range of America’s entrepreneurs is also changing. According to Kelley, the 35- to 44-year-old demographic used to produce the most entrepreneurs but now the majority of entrepreneurs are younger than ever.
“The younger entrepreneurs tend to be more prevalent this year,” Kelley says. “In the past, we tend to have older entrepreneurs, like 35 to 44 year olds. And that’s typical of a developed economy. Often times, the entrepreneurs are closer to mid-career.”
The study split the millennial generation (18 to 34 year olds) into youth (18 to 24) and early career (25 to 34). With youth rates at 14% and early career rates at 17%, the United States has the third highest rate of millennials intending to start a business in the next year out of the 29 innovation-driven—behind Qatar and Slovakia.
However, early stage venture activity rates continue to surge amongst millennials. At 19%, the early stage venture rate for early career millennials is tied for the highest ever with the 2004 rate. The rate is also a big jump from last year’s 15% and a continued increase from 2010 when rates were at the lowest at 11%. The rate for youth early stage ventures remained the same at 13% but is also a big jump from the bottoming out at 6%, also in 2010.
ENTREPRENEURSHIP: ‘THIS GENERATION’S LANGUAGE’
The report even states, “In many ways, entrepreneurship is this generation’s language.” And Ponzo is seeing similar “in light of the financial crisis, this generation is way more inclined to start their own thing,” Ponzo says. “They value the ability to control their own destiny.”
But it’s not just the 20- and 30-somethings jumping on the startup bandwagon—at 11%, the 55- to 64-year-old demographic starting businesses is the largest it’s ever been and the highest in the world. “In the past we always assumed when you get to retirement age or near, entrepreneurship will drop off,” Kelley says. “But when we started looking at the two different age groups, we see the drop off really doesn’t happen till closer to 65.”
Ponzo believes a structural change in expectations of retirement is guiding the increasing interest. “They’re not OK with sitting around and playing golf for the next 40 years,” he explains. “They want to keep their business skills fresh and so you see them doing more. That’s a demographic that has a ton of work experience and strong networks so it makes sense.”