KANSAS CITY — Food Business News introduced Food Entrepreneur in 2020 to track and profile the numerous startups seeking to disrupt all aspects of food and beverage manufacturing and production. Interest rates at the time were low, and the market’s appetite to invest in new applications and technologies appeared robust. Following an inflation surge and several interest rate hikes by the Federal Reserve, venture capitalists and other funders have become more cautious. Yet a new report shows the shift in the market has not yet dampened enthusiasm among budding entrepreneurs.
The “Global Entrepreneurship Monitor 2022-2023 USA” published by Babson College shows the total rate of entrepreneurship activity in the United States hit an all-time high in 2022. Among working-age adults surveyed, 19% were in the process of starting a business or running a business less than 42 months old, according to the report.
Not surprisingly, driving the rise in entrepreneurship were adults between the ages of 18-34 who were nearly twice as likely to start a business as those between the ages of 35-64 — 27% versus 14.5%. Most entrepreneurs in the United States said they were motivated by the prospect of generating “great wealth or high income.” However, compared to the 2021 survey, more than half also cited “necessity” as a motivation for entrepreneurship.
The Babson report also tracks entrepreneurship in different economies around the world. One data point that stands out about the United States is 69% of the entrepreneurs surveyed identified “making a difference” as it relates to social and environmental issues as a motivation to start a business, the highest level among the 21 economies tracked.
“It’s remarkable to see this record-breaking entrepreneurial activity, especially among young people, women and innovators, who are not only reshaping the business landscape, but also propelling significant social and environmental advancements,” said Donna J. Kelley, entrepreneurship professor at Babson College and the co-leader on the survey and the report.
The survey also found there has been a shift toward manufacturing in the types of businesses entrepreneurs are starting and away from service-oriented operations. The distribution of entrepreneurship across industries was relatively similar in 2020 and 2021, according to the report. In 2022, industry distribution moved away from finance, real estate and business services toward manufacturing and logistics.
Jeff Shay, one of the authors of the report, speculated the interest in logistics may be traced to media coverage of supply chain shortages that occurred during and after the COVID-19 pandemic.
It must be noted that with the rise in entrepreneurship also has come a rise in business failure, which has trended upward steadily since 2019 and reached 5.2% in 2022, according to the study. Two food-related entrepreneurs that fell victim to this dynamic were Hooray Foods, a manufacturer of plant-based bacon, and Nowadays, a processor of plant-based nuggets. Both were in the process of ceasing operations in September.
The continued strength of entrepreneurship is a welcome development. It’s a channel that may bring innovations and new concepts to market and, more importantly, may introduce younger professionals to the industry. As the market evolves it is hoped the momentum supporting entrepreneurship in the United States continues.