Orlando ranks third in the 2017 Kauffman Index of Startup Activity in terms of Startup Density. The Kauffman Index is a series of studies measuring the results of entrepreneurial activity in a metropolitan area. The Index is a great predictor of an area’s growth because it measures “new business creation, market opportunity, and startup density.” The Index examines business activity in thirty-nine metropolitan areas by sampling and analyzing three components: rate of new entrepreneurs, opportunity share of new entrepreneurs, and startup density.
Startup Density measures the number of employer startups compared to the number of employer businesses in a metropolitan area. The Index defines a startup business as “employer ﬁrms less than one year old and employing at least one person.” Orlando ranks third, with 105.5 startups per 1,000 employer businesses, the highest metro scoring 120. Startup Density is a mature measure of startup activity because only businesses with at least one employee are included.
Orlando’s high rank in Startup Density demonstrates that Orlando is outpacing other regions in startup and new business growth. While the other components of the Index measure the growth of individual entrepreneurs, Startup Density paints a bigger picture of entrepreneurial activity by looking at the holistic growth of businesses. Researchers and entrepreneurs say that the Startup Density is a “key indicator of vibrancy in entrepreneurial ecosystems.”