Abstract The current empirical entrepreneurship literature mainly shows a positive correlation between entrepreneurship (measured as the number of startups) and economic growth. However, the mechanisms by which entrepreneurship exerts its positive influence are not obvious. This chapter studies the connections between startups and local development at the municipallevel in Sweden 2000-08. We use a unique database including not only total startups, but also data on startups divided into six branches to study the impact of entrepreneurship on population and employment growth. Analyses are performed on all municipalities as well as by municipality type. In contrast to previous research, our results indicate that for several branch groups startup effects on growth may be more pronounced in low density areas than in urban agglomerations.