Overall Indicators of Entrepreneurship

It is important to contextualize Rhode Island’s performance on BIPOC entrepreneurship with overall indicators of entrepreneurship. Below Rhode Island is benchmarked against the comparison states and the U.S. on indicators of early state entrepreneurship and new employer businesses.

Early Stage Entrepreneurship

Rhode Island lags the country and the comparison states on most indicators of early state entrepreneurship. The percent of the U.S. population in 2020 that started a new business was 0.38% nationally compared to 0.16% in Rhode Island. Once businesses are created, Rhode Island lags on early startup job creation at 3.74% compared to 4.5% nationally, and the startup survival rate at 75.75% compared to 77.90% nationally. However, with an opportunity share of new entrepreneurs at 80.71%, Rhode Island entrepreneurs are more likely to start a business by choice, instead of by necessity, compared to the national average of 69.75%. Rhode Islands opportunity share of new entrepreneurs is like the comparison states.

State Rate of New Entrepreneurs Opportunity Share of New Entrepreneurs Startup Early Job Creation Startup Early Survival Rate

RI CT MA NJ NY PA U.S. Indicators of Early Stage Entrepreneurship, 2020

Percent of population that starts a new business Percent of new entrepreneurs who created a business by choice instead of necessity

Average number of jobs created by startups in their first year (normalized by population) Percent of startups that are still active after one year

0.16% 80.71% 3.74% 75.75%

0.28% 0.27% 0.36% 0.39% 0.18% 0.38% 74.48% 65.97% 79.84% 83.88% 83.09% 69.75% 3.62% 5.13% 6.69% 5.30% 3.71% 4.50% 77.67% 80.53% 79.58% 77.03% 79.05% 77.90%

Source: State Report on Early-Stage Entrepreneurship in the United States: 2020, Kauffman Foundation

New Employer Business

Rhode Island is number eight in the U.S. on the rate of new employer business actualization, meaning that a greater percentage of newly formed businesses in the State hire employees within 2-years compared to the national average (13.27% in the state compared to 9.41% nationally). The rate of new employer businesses emerging in Rhode Island is equal to the national average at 0.11 and lags most of the comparison geographies. Looking at new employers as a share of all employer firms, Rhode Island is well below the national average of 7.01% at 5.95%.

State Rate of New Employer Business Actualization (2020) Rate of New Employer Businesses (2019) Employer Business Newness (2018)

RI Indicators of New Employer Businesses

Percent of all new businesses that make a first payroll within 8 quarters of business application Number of new employer businesses per 100 people New employers as a share of all employer firms

13.27% 0.11 5.95%

CT MA NJ NY PA

9.64% 12.06% 8.25% 10.28% 9.78% 0.08 0.11 0.12 0.14 0.09 4.60% 5.90% 6.02% 6.02% 5.15%

U.S. 9.41% 0.11 7.01%

Source: 2020 New Employer Business Indicators in the United States: National and State Trends, Kauffman Founation.