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6 Reasons for Today’s Startup Boom

Mihir Gandhi

Record-breaking numbers of entrepreneurs around the world are starting their own businesses. Millions of people are forgoing the ‘job’ mentality and embracing their entrepreneurial spirit. There are little ecosystems of startup communities in nearly every major city in every industrialized country. The United States boasts almost half the global startups. Why is this happening?

1. U.S. vs. Global

The stage of economic development plays a role in volume, type and motivation for entrepreneurial startups. In the U.S., according to 2014 data from the Global Entrepreneurship Monitor, at least 13 percent of adults are starting and operating their own businesses. Where there is room for growth in the U.S. is in leveraging the global economy. GEM survey responses indicate fewer than 15 percent of U.S. entrepreneurs have a significant international customer base.

2. Opportunity Over Necessity

In the post 2008-recession, entrepreneurial motivation was reported as “necessity” – more people were starting businesses because they’d lost a job. Today, about 80 percent say they are motivated by opportunity in the economy.

3. Technology = Low Entry Cost

Technology is unquestionably the largest enabler of startup entry. The basic foundation for digital products and services are ubiquitous, cheap and flexible. The speed, universality and wireless nature of the Internet, the ease of cloud computing and access to tiny bits of code means an outsourcing and inexpensive smorgasbord for startups.

4. Social Media

An offshoot of technology, social media provides an interactive marketing and promotion platform at a fraction of the cost growing businesses used to have to spend on traditional advertising. A product invention or new service can be visible to the world with a small investment in a website and a few clicks of social promotion.

5. High Valuations

Valuations of a record number of privately held startups have hit $1 billion or more. As of June 2015, 66 of the 98 firms with valuations of $1 billion or more were American. There is no shortage of role models showing that it is indeed possible to become wealthy as an entrepreneur.

6. Demographics

Immigrants and boomers are both more likely to start businesses. According to the 2014 Kauffman Index of Startup Activity, immigrants to the U.S. started more than 28 percent of new businesses even though they represent just 13 percent of the population. And baby boomers between ages of 55 and 64 are starting more businesses than their Generation Y counterparts.

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