Veteran-Owned Startup Rates Declining Across America, According to Kauffman Report

Release Date: 11/08/2012

Contact:
Rossana Weitekamp, 516-792-1462, rossana@weitekamp.com
Barbara
Pruitt, 816-932-1288; bpruitt@kauffman.org, Kauffman Foundation

Veteran-Owned Startup Rates Declining Across America, According to Kauffman Report

Diminishing share of veteran-founded startups coincides 
with waning veteran population in the workforce

(KANSAS CITY, Mo.), Nov. 8, 2012 – With Veterans Day approaching, stories of soldiers’ service and courage will abound, but until now, little has been known about their role in one of America’s most important fields: entrepreneurship. A new study released today by the Ewing Marion Kauffman Foundation shows, for the first time, business creation by veteran status at the individual level over the past 16 years.

Until three years ago, U.S. veterans generally started companies at higher rates than non-veterans did. However, the "Kauffman Index of Entrepreneurial Activity by Veteran Status: 1996-2011" shows that veteran entrepreneurship shares have been declining steadily over the past two decades. In 1996, veterans represented 12.3 percent of all new entrepreneurs. By 2011, veterans comprised just 6 percent of new entrepreneurs.

Part of the decline can be attributed to falling veteran entrepreneurship rates compared to rising non-veteran rates. The biggest drop in the veteran share, however, coincides with increasing numbers of veterans aging out of the U.S. working-age population. The share of this population fell from 11.2 percent in 1996 to 6.4 percent in 2011, the study showed.

"Because falling veteran entrepreneurship rates are due primarily to the aging vet population, the downward trend does not mean this important demographic group does not have an interest in starting companies and working to see those companies perform well," said Dane Stangler, director of research and policy at the Kauffman Foundation. "However, what’s troubling about the waning numbers of veteran-owned startups is that younger veterans now have less support from within their own community of veterans as they consider their own entrepreneurial ventures: fewer networking opportunities, mentors and funders among the older generations of vets. What we don’t yet know is how this may affect younger veterans’ pursuit of entrepreneurship."

In 2011, 320 out of 100,000 adults, or 0.32 percent, created new businesses each month, while just 300 veterans out of 100,000 adults started companies.

The study is based on data from the Kauffman Index of Entrepreneurial Activity, which captures new business owners in their first month of significant business activity and provides the earliest documentation of new business development across the country. The percentage of the adult, non-business owner population that starts a business each month is measured using data from the Current Population Survey. New data extracts for every month of CPS data from 1996 to 2011 were downloaded and compiled to create estimates of entrepreneurship rates by veteran status.

View an infographic that highlights the key findings.

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