Entrepreneurship growth: perception vs reality

The flurry of media activity in entrepreneurship including the spate of new TV shows like X-Factor for tech and Shark Tank, the refocus of the NYTimes and WSJ on technology, and the number of entrepreneurs on mainstream magazine covers gave me the impression that entrepreneurship is on the rise.

While this may be true in pockets like New York or California, entrepreneurship in the US is shrinking - at least according to the Bureau of Labor Statistics and a report from the NYTimes: When Job Creation Engines Stop at Just One

For decades, new companies have produced most of the country’s job growth. Without start-ups, the country would have had a net increase in jobs in only seven years since 1977. The number of people employed by new businesses peaked in 1999, the height of the tech bubble, and has fallen by 46 percent since then, to 2.5 million in 2011, creating a slow leak in job creation that has proved difficult to plug.

“There’s this idea that we can somehow rely on entrepreneurship to get us out of the job crisis,” said Scott Shane, an economics professor at Case Western Reserve University. “That’s getting harder and harder, considering there are fewer and fewer of them, and they’re each employing fewer people.”

Entrepreneurship is the engine of growth for the US. We should be doing everything we can to cultivate it: relaxing H1B visa laws, providing better access to capital through banks and the SBA, and fostering the communities to support and educate new entrepreneurs.

Published 2012-10-05 in


Tomasz Tunguz is partner at Redpoint. I write daily, data-driven blog posts about key questions facing startups. I co-authored the book, Winning with Data. Join more than 20,000 others receiving these blog posts by email.


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