The number of new businesses in Oregon jumped by more than 30% in the most recent federal data compared to pre-pandemic levels. State economists consider it a sign of renewal in the state’s economy.

“That’s a long-run driver of innovation, is from new businesses,” Josh Lehner, from the Oregon Office of Economic Analysis, told state lawmakers last week.

Oregonians started 14,000 businesses in 2022, up from an annual average of 10,600 from 2017 through 2019. Lehner said that’s a hopeful sign that could help offset the economic headwinds created by slow population growth.

New businesses are more innovative and nimble, Lehner told lawmakers, and less prone to bureaucratic inertia. And he said the more new businesses that emerge, the greater the chance that some of them grow into big employers and economic stalwarts.

“There’s just a lot more ping-pong balls in the hopper,” Lehner said.

Business bankruptcy filings are at all-time lows, but the number of businesses that survive their first year have dropped recently, both in Oregon and across the country. The growth in new businesses is handily exceeding the growth in business failures, however, which translates into a net increase in successful new businesses.

Entrepreneurs tend to be in their 30s and 40s so Lehner said it makes sense that new business formation is rising as the relatively large millennial generation ages into that demographic category.

The growth in new businesses comes despite a steep decline in venture capital, which has fallen by half in each of the last two years. Venture capital is the outside investment that ambitious entrepreneurs use as they seek to rapidly transform a startup into a big business.

But Lehner noted that most people starting new businesses don’t have such lofty goals and fund their ideas with personal savings or credit card debt. Rising incomes and home values made it possible for many budding small business owners to fund their ideas themselves.

And Lehner said they’re building the foundation of Oregon’s future.

“Hopefully these new firms will drive innovation in the economy for years to come,” he said.