Gazelle Firms

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The Office of Advocacy of the U.S. Small Business Administration just released a study by Zoltan Acs of George Mason University and his colleagues. The study examined “high impact” companies – companies that “had sales of which have at least doubled over the most recent 4-year period and which have an employment growth quantifier of 2 or greater over the same period.”

To me, this is a very interesting study. Here are four things that I found interesting and why:

1. Only 3.8 of businesses are “high impact” companies. This indicates that few businesses become gazelles.

2. Only 2.8 percent of “high impact” companies were ten years old or less. That is, most gazelle companies are not new companies.

3. The industries in which Acs and colleagues found a high proportion of high impact firms are the same industries in which Census data show a lot of high growth new businesses. For instance, the “high impact” firm percentage and the percentage of new firms achieving between $5 million and $9.999 million in sales at age six correlated 0.60. That is, some industries appear good for both types of high growth firms.

4. The percentage of “high impact” firms differed across metropolitan statistical areas (MSAs) – but only ranged from 1.8 percent to 3.3 percent of companies. Stated differently, the MSAs with the most “high impact” firms only have 82 percent more “high impact” firms than the MSAs with the fewest high impact firms. That is, all places have at least some high impact companies.

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Scott Shane


Scott Shane Scott Shane is A. Malachi Mixon III, Professor of Entrepreneurial Studies at Case Western Reserve University. He is the author of nine books, including Fool's Gold: The Truth Behind Angel Investing in America ; Illusions of Entrepreneurship: and The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By.

10 Reactions

  1. “2. Only 2.8 percent of “high impact” companies were ten years old or less. That is, most gazelle companies are not new companies.”

    This statistic speaks volumes about market experience and market customer recognition.

  2. After reading this information, I find it to be very interesting. It stands to reason though that consumers tend to stay with companies with longetivity.

  3. very interesting study….. still consumer is the KING.

  4. Martin Lindeskog

    Here is Sweden, the business daily newspaper (“Daily Industry”) has an event called Gazelle firms of the year.

  5. Mark Anderson

    That “Only 2.8 percent of “high impact” companies were ten years old or less. That is, most gazelle companies are not new companies” stat is the most fascinating for me. You’d think the younger companies would be more gazelley. (Is that a word?)

  6. To me it makes perfect sense that the largest growth is with older companies. It’s really hard to come storming out of the gate.

  7. Anita Campbell

    What struck me about this study is that on average, high-impact firms were over 25 years old!

    I wrote about this too, over at the OPEN Forum: High Growth Firms Tend to be Old Fogies, Not Startups.

    What’s more, these firms may have had no growth or even declined in some years before becoming high growth.

    All of which suggests to me a good reason for the SBA and other governmental groups to support even low growth small businesses, to give them a chance to mature and get to the high-growth phase.

  8. Martin Lindeskog

    In the Sweden you have a business plan competition that wants to foster growth companies. Check it out: http://venturecup.org

  9. Thanks for sharing this with us.
    Unfortunately the great mistake policy makers frequently make regarding high growth companies is that they get the bit about the overall job creating capacity of such firms, but fail to get the bit about their usually being older firms rather than start-ups. Hence we get development resources being concentrated on so called high potential start-ups, particularly those in high tech sectors, an approach very often accompanied by one wher older firms in more mundane sectors are more or less starved of official resources, and left to fend for themselves! That at least summarises the current Irish situation.

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