New businesses add 3 million jobs annually on average in their first year, while older firms lose 1 million jobs. New businesses, especially in under-resourced communities, significantly increase personal income and tax revenue. Incubators are also very efficient at job and tax revenue creation, generating 46-69 jobs and $30 in tax revenue for every $10,000 invested.
1. New businesses in the U.S. add an average of
3 million jobs in their first year,
while older firms lose 1 million jobs annually.
Older Firm
Job Losses
New Business
Job Gains
Sources: U.S. Department of Labor, Kauffman Foundation, and McKinsey & Co.
o Between 1980 and 2005, companies less than 5 years old
accounted for almost all net new job creation
o 27% of U.S. businesses are less than 4 years old
o High growth firms add an average of 88 employees a year
New Jobs
Stronger Community
New businesses in under-resourced
communities lead to increases of 2.5 to 10
times the individual’s previous income
Before After
PersonalIncome
o When an initial loan was awarded 97% of microbusiness
remain open through an economic downturn, and 5.6 jobs area
created
o The average microbusiness owner has 2.5 times more in
personal assets, and the business contributes an average of
$3,678 in returns to the tax base
Sources: Aspen Institute and Association for Enterprise Opportunity
501 East Franklin Street
Richmond, VA 23219
(804) 521-4002
www.rvaworks.orgRVAWorks
RVAWorks
@RVAWorks
2. Incubators produce the
greatest number of jobs
per $10,000 of
investment.
Sources: Source: U.S. Economic Development Administration.
Efficient Investment
Economic Returns
$1 invested in an incubator results in
$30 of increased tax revenue.
Sources: Global Impact Investing Network and JP Morgan; National Business Incubation Association
=
o 46 – 69 new jobs are created through a $10,000 investment
into a new business incubator.
$1
$30
Expected internal rate of return on
developed market, private equity impact
investments19%
Real Results
71%
Percentage of graduates who are actively
operating their business
o 34 students have entered the Startup Works program, with 62% coming from lower
income households and 97% are women- or minority-owned startups
o 21 founders have graduated
o 17 new businesses are in operation
o 71% are actively operating their business Source: RVA Works Analysis
501 East Franklin Street
Richmond, VA 23219
(804) 521-4002
www.rvaworks.org