Despite the pandemic ravaging effects on the global economy, new research shows an uptick in U.S. entrepreneurship this past year.
According to new data released by Babson College, more Americans were starting and running new businesses last year despite the economic effects of the pandemic, according to new data highlighted in the 2020/2021 U.S. Global Entrepreneurship Monitor (GEM) Report .
The findings show that in 2020, the Total early-stage Entrepreneurial Activity (TEA) rate, which measures the percentage of adults 18-64 actively engaged in starting or running a new business, was 15.4%, down slightly from 17.4% in 2019, but equal to results reported in 2018.
The new report shows Americans turned to entrepreneurship when faced with an uncertain labor market. Last year, one-half of entrepreneurs said they were motivated to start a venture because jobs were difficult to find, representing a 22% increase from 2019. Moreover, some 54% of entrepreneurs, and 43% of business owners, reported that the pandemic introduced new business opportunities.
“The United States has long relied on entrepreneurs to drive innovation, job creation and economic growth,” GEM U.S. Team co-Leader and Babson College Entrepreneurship Professor Donna Kelley said in a news release. “There is no question that the pandemic created both challenges and opportunities for entrepreneurs and mature business owners. Stable jobs and economic vitality depend on the survival and growth of businesses. This research can help guide decisions that support entrepreneurship in America, which will surely be a critical contributor to the post-pandemic recovery.”
The Global Entrepreneurship Monitor Report, which polled more than 2,000 U.S. adults in August 2020, provides a comprehensive look at the impact COVID-19 had on entrepreneurs and business owners six months after the pandemic first caused restrictions on American life and business. Among established business owners, 58% halted some of their core business activities because of COVID-19. Of those who closed a business, more than one-third cited the pandemic as the reason.
Despite the fact that 82% of entrepreneurs thought that starting a business was more difficult than a year earlier, and nearly 70% cited delays in getting their businesses operational because of COVID-19, Americans were still starting and running new businesses in 2020.
Perceptions about one’s capabilities for starting a business were high (64%) and relatively unchanged from 2019. However, opportunity perceptions dropped from 62% in 2019 to 49% in 2020. Fear of failure rose from 35% in 2019 to 41% in 2020, an all-time high.