Why is it Significant?
New business formation is a key source of job creation and cluster growth, typically accounting for 30 to 45 percent of all new jobs in the U.S. It is also important to the development and commercialization of new technologies. The number of ‘spin-out’ companies from universities, teaching hospitals, and non-profit research institutes (including out-licensing of patents and technology) is an indicator of the overall volume of activity dedicated to the translation of research outcomes into commercial applications.
Initial Public Offerings (IPOs) and Mergers and Acquisitions (M&As) represent important business outcomes with which emerging companies can access capital, expand operations, and support business growth. IPOs and M&As are opportunities for early-stage investors to liquidate their investments and free up capital for future investment. IPOs of venture-backed companies can reflect investor confidence in the market. Overall figures are relatively low so it is expected that year-over-year figures will fluctuate, which is why it is important to review trends over multiple years.