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Report Shows Tech-based Startups Grew 47 Percent in Last Decade - More than 400 in VT in 2016

Wednesday, December 6, 2017   (0 Comments)
Posted by: Jeff Couture

The number of technology-based startups in the U.S. 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 although these technology-based start-ups account for a relatively small share of all businesses in the economy, they are 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:

  • The number of these tech-based startups grew 47 percent from 2007 to 2016;
  • Tech-based industries have the highest employment multipliers—one tech-based job creates five jobs in other industries;
  • Wage growth among tech-based startups was higher than overall U.S. wage growth from 2007 to 2016 (20 percent versus 3 percent);
  • VC-backed startups grew employment and sales 40 percent faster than non-VC-backed startups on average.
  • Massachusetts had the most employment in tech-based startups as a share of its total workforce in 2016 (2.4 percent).

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.

Vermont info

The report found that in 2016 Vermont saw 429 tech-based startup establishments representing 401 firms that employed 2,718 employees.

Vermont ranked 29 out of 50 states for technology-based startups as a share of the state's total firms, but Vermont ranked 17 for tech-based startup employment as a share of the state's total employment and for average number of workers (13) employed per tech-based startup, compared to other states.

About 40% of the startups were in the computer system design services sector, which includes software development, integrating computer systems and networks, and management of business IT infrastructure.

Read the report.


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