Kauffman report: KC startup momentum builds for 3 years running, improves national rank

It’s not just a feeling.

Momentum in Kansas City’s startup community continues to grow, according to new data from the Ewing Marion Kauffman Foundation.

The Kauffman Index of Startup Activity found that for the third consecutive year, entrepreneurial activity in the Kansas City metro has grown. The index — which presents entrepreneurial trends nationally, at the state level and for the 40 largest metro areas — revealed that Kansas City’s startup activity moved from a No. 19 ranking in 2016 to No. 15.

The report is the latest indication that Kansas City’s startup community is growing not only in size but also in economic impact. The data shows Kansas City’s ranking improved thanks to an increased density of area startups, a higher rate of new entrepreneurs and a boost in the opportunity share of new entrepreneurs.

Let’s look at the improvements.

In 2016, there were roughly 84 startups per 1,000 Kansas City firms — which is a 8 percent increase in startup density from 2015 data, according to the report. Startups, as defined by the index, are firms less than one-year-old and employing at least one person besides the owner.

The number of Kansas Citians becoming entrepreneurs also grew. Kansas City’s rate of new entrepreneurs increased from .32 percent in 2016 to .37 percent in 2017. The metric measures the percent of the adult population of an area that became entrepreneurs in a given month.

Lastly, the percentage of Kansas Citians that became new entrepreneurs because of market opportunities — rather than starting a business out of necessity — slightly increased. The opportunity share of new entrepreneurs in the area grew from 77.72 percent in 2016 to 77.8 percent in 2017. This metric measures the percent of new entrepreneurs who were not unemployed before starting their businesses.

The index is the latest validation point for momentum behind Kansas City’ entrepreneurial community, which in recent years has been bolstered by a variety of sources. In addition to increased coverage on national and local media on startups, more investors have rallied funds targeting startups, more organizations have developed programming to help entrepreneurs grow their firms and the area has seen more high-profile exits.

The Miami metro area claimed the No. 1 spot for startup activity, followed by No. 2 Austin and No. 3 Los Angeles, according to the report.