Small Business Startup News

Existing Companies Breed More Startups Than Entrepreneurship Programs Or Research Universities

Written by Tim Morral
Published: 9/17/2013

Kauffman Foundation study shows that in metropolitan areas, previous work experience at a successful business or institution is the most likely path to entrepreneurial activity.

Entrepreneurs come from a wide variety of backgrounds. Although some business owners set out to achieve entrepreneurial success early in their professional lives, others enter the world of small business ownership after one or more careers in other fields.

Where Do Entrepreneurs Come From?

But according to a recent study by the Kauffman Foundation, most new business owners in metropolitan areas come from existing companies--not universities or entrepreneurial programs.

Each year, thousands of employed, aspiring entrepreneurs act on their goal of starting a company. But with the peak age for entrepreneurs in the 35-45 year-old range, "spinoff" activity is especially common in the high tech startup sector.

"Entrepreneurs come from somewhere -- this seems obvious, but runs against the prevailing stereotype that entrepreneurs are, or should be, recent college grads or college dropouts," said Dane Stangler, director of research and policy at the Kauffman Foundation. "That 'somewhere' usually is a previous job in a big company or at an institution, such as a university, which helps explain the age distribution of entrepreneurs."

Stangler points out that two of the most prolific startup hubs in the country--Silicon Valley and Boulder--have developed over a period of time, leveraging the talent of entrepreneurs that have been culled from the ranks of other firms.

The study also showed that the majority of geographies with above-average startup activity have been entrepreneurial hotspots for at least 20 years. In the high-tech sector, all of the top 10 startup cities were in the top 20 in 1990.

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