Census researchers Teresa Fort, John Haltiwanger, Ron S. Jarmin, and Javier Miranda have released a new working paper, "How Firms Respond to Business Cycles: The Role of Firm Age and Firm Size" (available here) that looks at new firms and their employment during expansions and recessions. They find that new, small firms fair much differently than small/older businesses.
The work is based on the Census Bureau's Business Dynamics Statistics (BDS), which very importantly allows researchers to look at businesses by firm age. A lot of work in entrepreneurship research uses self-employment or small firms as a proxy for startups, but the BDS allows for a much more direct measure by looking at Age 0 employer firms (employer firm = employs at least one person besides the founder).
Young small and medium-sized firms were hit especially hard during the recent recession. The above chart shows a big dip in job creation rates (there are more charts and data analysis in the paper). Since young firms disproportionately create new jobs, this analysis helps explain why the recovery has been so weak. Why the dip? Research (including our own Kauffman Firm Survey) has found that entrepreneurs will frequently rely on home equity for financing, and the authors here find evidence that the collapse in housing prices accounted for a significant portion of the decline of young, small firms during the recession.
This helps shed further light on how important home equity appears to be for startups, and informs us about the financing environment. I think the implication for entrepreneurs is to heavily consider their home's value when starting up in the current environment.
Disclosure: the Kauffman Foundation helped fund this research.