Milwaukee startup activity remains low

Wisconsin ranks dead last among 25 largest states

Milwaukee ranks 39th among the 40 largest metropolitan areas in the country when it comes to startup activity, according to the latest Kauffman Index of Startup Activity.Startup-191690525-shutterstock

The respected index, conducted by the Ewing Marion Kauffman Foundation, is a set of economic indicators that measure new business creation across the county. Milwaukee also ranked 39th in the 2015 report.

Nationally, startup activity increased for the second year in a row, after hitting its lowest point in decades in 2014.

“The reason why we care about new firms and new entrepreneurs is they create jobs,” said Arnobio Morelix, senior research analyst for Kauffman. “We see kind of a return of economic activity and entrepreneurship in the U.S.”

The national results showed businesses are being started out of opportunity rather than necessity, Morelix said. The startup gender gap also narrowed this year, and percentage of entrepreneurs who are minorities nearly doubled, to 40 percent.

“We see startup activity higher for more than half of the 40 largest metros in the nation,” Morelix said.

Not so for the Milwaukee-Waukesha-West Allis metro area.

The rate of new Milwaukee-area entrepreneurs, or the percentage of the adult population that became entrepreneurs in a given month, was 0.1 percent in 2016, down from 0.13 percent in 2015.

The opportunity share for new Milwaukee entrepreneurs, which measures the percent of new entrepreneurs who were not employed before starting their businesses, was 82.9 percent, up from 74.5 percent last year. The opportunity share indicates how many entrepreneurs started a company because they saw market opportunities.

The startup density in Milwaukee is 59.3, up from 58.4 last year. Startup density measures the startup firms per 1,000 firm population. Kauffman defines startups as businesses younger than one-year-old and employing at least one person other than the owner.

Austin, Texas was the top city for startup activity, with a 0.6 percent rate of new entrepreneurs and a startup density of 105.2. Also in the top five were Miami, Los Angeles, San Francisco and Las Vegas.

Wisconsin ranked dead last in startup activity among the 25 largest states. The state as a whole had a 0.19 percent rate of new entrepreneurs, up from 0.17 percent last year.

Wisconsin had a 74.19 percent opportunity share of new entrepreneurs, up from 71.18 percent last year and a startup density of 57.9, down from 58.6 last year.

The report pointed out that Wisconsin’s startup density is the lowest among the twenty-five largest states, and that Florida’s startup density is 76 percent higher than Wisconsin’s.

Montana was the top ranked state in 2016, with a 0.5 percent rate of new entrepreneurs, an 84.12 percent opportunity share of new entrepreneurs and startup density of 71.7. Also in the top five states were Nevada, Wyoming, Oklahoma and Texas.

Milwaukee entrepreneurial businesses also are not growing as quickly as the rest of the nation’s largest metropolitan areas. In June, the Kauffman Foundation’s Index of Growth Entrepreneurship showed the metro area ranked 31st out of 40 in startup business growth.

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Molly Dill, former BizTimes Milwaukee managing editor.

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