US Economy: Startup Slump: New business creation rate slows

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In the US, the stock market is up. The unemployment rate is down. But there's one trend generating some concern among some economic observers: a drop in the number of businesses formed each year. Some call it a startup slump. CGTN's Hendrik Sybrandy takes a closer look from the US state of Colorado.

In Denver, Colorado, SyncHR is on a roll. The company offers what it calls next generation human resources, payroll and benefits software to mid-sized firms. It has 130 employees now, and it's growing.

CHARLES VAR SYNCHR CHIEF MARKETING OFFICER "We' ve been on a really fast growth spurt. We've been doubling just about every year for the last three years which is good news."

Doubling revenues, SyncHR's Charles Var says. They're moving into bigger offices soon.

CHARLES VAR SYNCHR CHIEF MARKETING OFFICER "We just don't have enough seats for bodies and so we found some different space that has more square feet."

Businesses like SyncHR were celebrated recently at Denver Startup Week, an event dedicated to the entrepreneurial spirit.

TAMI DOOR, CEO DOWNTOWN DENVER PARTNERSHIP "There's no question Denver is a hotbed of individuals taking risk and starting companies, but it's not the case across the whole country."

HENDRIK SYBRANDY DENVER "No, it isn't. 414,000 businesses were formed in the U.S. in 2015, according to the Census Bureau, a 25 percent drop from 2006. One in 12 companies in 2015 were a year old or less. That number has also been dropping."

While the U.S. recession played a role, some argue big corporations have crowded out new challengers. Tami Door, one of Startup Week's organizers, says American students have also been taught to play it safe.

TAMI DOOR, CEO DOWNTOWN DENVER PARTNERSHIP "I would say for the most part we haven't put being an innovator and taking risk at the same level as following the rules and staying on track."

DARRIN DUBER-SMITH METROPOLITAN STATE UNIVERSITY OF DENVER "I think there's a lot of truth to that."

Marketing expert Darrin Duber-Smith says baby boomers are aging out of prime business-starting years. He also thinks high corporate taxes, rising labor and health care costs and difficulty in accessing capital represent barriers to entry for startups.

DARRIN DUBER-SMITH METROPOLITAN STATE UNIVERSITY OF DENVER "Which means fewer new products, fewer new categories, fewer new industries, and ultimately it probably means less innovation."

And a less productive US economy. But don't tell that to these Startup Week attendees. 19,000 of them attended 350 events over five days.

CONOR SWANSON CODE TALENT PARTNER "It's a fascinating opportunity to learn from others, to be inspired by people, to take stories from different communities and apply them to your own."

SyncHR wants to become a household name when it comes to payroll software.

CHARLES VAR SYNCHR CHIEF MARKETING OFFICER "We're going to continue to grow. It'll be interesting new challenges as we scale the business as they say."

A success story, so far. The challenge is creating lots of others. Hendrik Sybrandy, CGTN, Denver.