The number of technology-based startups in the US economy grew a robust 47 percent in the last decade, according to a detailed analysis released by the Information Technology and Innovation Foundation (ITIF), a leading science and tech policy think tank. The report found that these technology-based start-ups, while accounting for a relatively small share of all businesses in the economy, are especially important drivers of America’s overall growth because they make outsized contributions to employment, innovation, competitiveness and productivity growth.
“Technology-based startups are star players for the economy. They offer better-paying, longer-lasting jobs than other startups, they innovate more, and they are more likely to export their goods and services, which makes a disproportionate contribution to growth,” said ITIF President Rob Atkinson, who co-authored the report. “There is a false impression that because some technology-driven companies have become hugely successful, there is now no room for new entrants. But that’s clearly not the case. Technology and innovation-driven startups are thriving. Policymakers should take care to continue nurturing them with the right tax policies, regulatory environment, research incentives, and market conditions.”
The report quantifies entrepreneurship in 10 technology-based industries over the last decade (2007-2016) at the national, state, and congressional district levels. The highest number of technology-based startups in any state is more than 30,000 in California.
According to the report, technology-based startups—defined as firms 10 years old or younger in tech-based industries—have been getting better at creating jobs and staying in business. The report finds:
In order to increase the startup rates for technology-based firms and enable them to grow faster, the report urges policymakers to focus on tax reform, regulatory reform, improving STEM skills, and improving federal technology-transfer policies.
The authors provide a series of specific examples:
“All levels of government—local, state, and federal—have a role in implementing policies that support technology-based startups,” said John Wu, ITIF Economic Analyst and lead author of the report. “Government leaders should promote policies that will help current and future technology-based startups emerge and grow so they can then go on to generate long-lasting, high-paying jobs, increase innovation and productivity, and improve the global competitiveness of the US economy.”Related Articles: