From its founding in 1842 until 2017, 33 startup companies were created at the University of Notre Dame based on research discoveries. By comparison, the 27 startups launched between July 2017 and June 2018— the first year of the University’s new IDEA Center’s operation–has been exceptional by any measure. We expect this new, greatly accelerated pace of startup formation to be the new normal at Notre Dame.
In a series of four short articles called “The Big Small,” Bryan Ritchie and Nick Swisher of the IDEA Center will explain the reasonings behind why the IDEA Center is committed to producing startups. We will examine the economic benefits of startups, how they drive innovation and new ideas forward, why they create leaders and develop positive traits, and why and how the IDEA Center will be producing dozens of high-potential startups every year, with powerful impacts on Notre Dame and our neighbors in the South Bend-Elkhart region of north-central Indiana and southwest Michigan.
This first article, “The Economic Benefits of Startups,” explores the remarkable impact startups have on jobs, economic growth and productivity.
Startups Create Jobs
Recent research confirms what entrepreneurs have long suspected: startups drive the creation of new jobs. “Without startups, there would be no net job growth in the U.S. economy,” explains Vivek Wadhwa, a distinguished fellow at the Labor and Worklife Program at Harvard. “From 1977 to 2005, existing companies were net job destroyers, losing 1 million net jobs per year. In contrast, new businesses in their first year added an average of 3 million jobs annually.” While that number dipped during the Great Recession, signs of new dynamism in the economy, including startups, has emerged in recent years.
The Bureau of Labor Statistics found that the number of new private establishments, including both expansions and startups, increased 2.5 percent in early 2016, which is nearly as fast as the boom years of the 1990s.