Andrew Levine knew he wouldn't find a job in investment banking when he graduated with an M.B.A. from the University of Miami in 2008.
Wall Street was in the midst of a financial collapse. So instead the 24-year-old focused his efforts on launching a start-up.
"I figured that starting my own company was the best use of my time while I waited for the market to thaw," says Levine.
Faced with an unemployment rate of 16 percent for 20- to 24-year-olds, a growing number of recent college and grad-school graduates are launching their own companies, according to anecdotal evidence from colleges, universities and entrepreneurship programs around the U.S.
For his part, Levine built upon a business plan for a niche social-networking company he had created for an entrepreneurship class the prior year. He showed the plan to the father of a college friend who was an angel investor and got $40,000 in seed money in exchange for an equity stake in the business.
Armed with start-up cash, Levine created audimated.com, an online social-networking site for musicians and their followers. It serves as a forum for the independent music community—both fans and musicians—to discover and promote new music. The site is in beta testing now with a launch expected in January.
This push toward entrepreneurship among young people is likely to continue as employers plan to hire 7 percent fewer graduates from the class of 2010 than they hired from the class of 2009, which saw a nearly 22 percent drop in hiring from the class before, according to a recent report from National Association of Colleges and Employers.
The annual average percentage of all job seekers starting their own businesses increased to 9 percent through the third quarter of 2009, according to Challenger, Gray and Christmas, a global outplacement consultancy.
That's compared with 5 percent at the end of 2008.
"Given the state of the economy, and the state of the job market, many young people are getting the push they needed to become entrepreneurs," says Bo Fishback, vice president of entrepreneurship at the Kauffman Foundation, a nonprofit organization that promotes entrepreneurs. "It's a lot easier to decide to launch your own company when there aren't a lot of jobs out there."
School career-service officials say it makes sense for new grads to go the start-up route. Young adults are often well-suited to put up with the long hours start-ups demand. They don't have the responsibilities and financial obligations that burden older adults. What's more, these graduates grew up on the latest technology and easily adapt to technological improvements.