The Number of New Startups Is Down—and That's OK

July 25, 2018

A cottage industry of pundits has emerged in recent years to address the supposed crisis of declining new business formation. But as Rob Atkinson and Michael Lind write for Entrepreneur, there's no need for reflexive hand-wringing about the decline of startups. In fact, there is no relationship between that sort of small business and economic growth. We should not worry about the total number of new small businesses of all kinds, since the vast majority are founded so their owners can fulfill personal lifestyle goals and many more won't survive the cradle. What really matters is how high-growth, innovation-based startups are doing (think: biotech or robotics startups, not owner-operated pizza parlors). And here, things are healthy. Alarmism over the entire class of dwindling startups is misguided—and if the mistaken diagnosis leads to harmful policy prescriptions, such as radical anti-trust enforcement, then it could even be dangerous.