Despite efforts to evolve to a more entrepreneurial economy, metropolitan Detroit and Michigan remain some of the least entrepreneurial places in the nation, a new study reported Monday.
The Kauffman Foundation reported that the Detroit and Chicago areas boasted just 180 entrepreneurs per 100,000 population in 2011, compared with nation-leading Los Angeles, which had 580 entrepreneurs per 100,000 population. Other leading metro areas for start-up business activity included Atlanta, Phoenix and Miami.
Meanwhile, Michigan ranks 42nd among the 50 states for entrepreneurial start-ups in 2011, the report said.
Ken Nisbet, director of the University of Michigan Tech Transfer office, said in a recent interview that Rust Belt economies that for decades depended on giant corporations need to evolve to more entrepreneurial approaches to business activity.
"What we've found in the Midwest, we have to work a lot harder," he said.
But the good news for Michigan entrepreneurs is that the state has been working in recent years to nurture a more start-up-friendly environment. Several business incubators have started since the mid-2000s to assist entrepreneurs, including Ann Arbor SPARK, TechTown at Wayne State University and the Macomb Oakland University Incubator.
Josh Linkner, managing partner of Detroit Venture Partners, the venture investment fund started by Quicken Loans founder and Chairman Dan Gilbert, said Detroit is making great strides to become a more tech-savvy entrepreneurial place.
Of the Kauffman data, he said, "I think it's an interesting data point, but it's a trailing indicator. ... We're making great progress, and some at point it will bust open and we'll be third on that list."
The closely watched Kauffman Index of Entrepreneurial Activity provides the earliest look at new business establishment across the country. The percentage of the adult population that starts a business each month is measured using data from the monthly Current Population Survey conducted by the U.S. Bureau of the Census and the Bureau of Labor Statistics.
In a key finding of the latest report, the foundation said that many entrepreneurs in the U.S. are running solo operations rather than adding employees.
"The Great Recession has pushed many individuals into business ownership due to high unemployment rates," said Robert Litan, vice president of research and policy at the Kauffman Foundation. "However, economic uncertainty likely has made them more cautious, and they prefer to start sole proprietorships rather than more costly employer firms."
He referred to this as the "jobless entrepreneurship" trend.
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