Electronic copy available at: http://ssrn.com/abstract=1456380
AN OVERVIEW OF THE KAUFFMAN FIRM SURVEY:RESULTS FROM THE 2004–2007 DATA1
lthough entrepreneurial activity is animportant part of a capitalist economy,data about U.S. businesses in their earlyyears of operation have been extremelylimited.
As part of an effort to gather more dataon new businesses in the United States, the EwingMarion Kauffman Foundation (the Foundation)sponsored the Kauffman Firm Survey (KFS), a panelstudy of new businesses founded in 2004 andtracked over their early years of operation. The KFSdataset provides researchers with a uniqueopportunity to study a panel of new businesses fromstartup to sustainability, with longitudinal datacentering on topics such as how businesses arefinanced; the products, services, and innovationsthese businesses possess and develop in their earlyyears of existence; and the characteristics of thosewho own and operate them.
The current data provide anunderstanding of how businesses are organized andoperate in their first four years of existence (2004through 2007) and provide some indicators ofsurvival and growth. Other measures describe thecharacteristics of the panel, such as the extent towhich these businesses are involved in innovativeactivities. A series of eleven tables give a broadoverview of the business and owner characteristicsand firm survival over the period, as well as somenew information available in the third follow-upsurvey. Highlights include:•External debt markets remain critically importantfor most new firms.•In the first year of operation, external debtmarkets provided the single largest source offinancing. The new firms injected about$80,000 on average into their new venturesduring the first year of operation. Outsiderdebt (bank loans, credit cards, credit lines,etc.) made up more than $32,000 of thattotal and was the single largest fundingsource.•Three years later, in 2007, surviving firmsinjected another $53,000 into theirbusinesses. This amount is much lower thanin 2004, but the percentage of financialcapital raised from outside credit marketsincreased to 62 percent. Thus, the importanceof external debt markets continues to rise asfirms survive and grow in their early years.•Only about 12 percent of firms submitted newexternal credit applications for debt financingin 2007.•For the vast majority of firms, theapplication(s) always were approved. Nearly18 percent of firms had mixed results,sometimes approved and sometimes denied.Just over 12 percent of firms said their loanapplications always were denied.•For those that had some or all of their loanapplications denied, almost half said that oneof the main reasons given was insufficientcollateral to guarantee the loan. The secondmost-common reason was flaws in theowner’s personal credit history.•Seventeen percent of firms said they didn’tapply for credit at some point when theyneeded it because they feared their loanapplications would be denied. However, thisgroup that feared denial had a higherproportion of firms that applied (20.7percent) than the sample overall (12 percent).
1. http://www.nap.edu/catalog/11844.html2. A comparison of the KFS dataset with other business datasets along a number of dimensions is provided in Appendix C.