This paper examines the role of regional clusters in fostering entrepreneurship. It focuses on the distinct influences of convergence and agglomeration on the growth of start-up firms and employment in these firms within a given region and industry. The authors argue that while reversion to the mean and diminishing returns to entrepreneurship can lead to a convergence effect, the presence of complementary economic activity creates externalities that enhance incentives and reduce barriers for new business creation. Clusters are identified as a key mechanism through which location-based complementarities are realized. The empirical analysis uses a novel panel dataset from the Longitudinal Business Database of the Census Bureau and the U.S. Cluster Mapping Project. The results show that industries located in regions with strong clusters experience higher growth in new business formation and start-up employment. Strong clusters also contribute to the formation of new establishments of existing firms and improve the survival rate of start-up firms. The study concludes that strong clusters facilitate growth in entrepreneurship by lowering entry costs, enhancing innovation opportunities, and providing access to a diverse range of inputs and complementary products.This paper examines the role of regional clusters in fostering entrepreneurship. It focuses on the distinct influences of convergence and agglomeration on the growth of start-up firms and employment in these firms within a given region and industry. The authors argue that while reversion to the mean and diminishing returns to entrepreneurship can lead to a convergence effect, the presence of complementary economic activity creates externalities that enhance incentives and reduce barriers for new business creation. Clusters are identified as a key mechanism through which location-based complementarities are realized. The empirical analysis uses a novel panel dataset from the Longitudinal Business Database of the Census Bureau and the U.S. Cluster Mapping Project. The results show that industries located in regions with strong clusters experience higher growth in new business formation and start-up employment. Strong clusters also contribute to the formation of new establishments of existing firms and improve the survival rate of start-up firms. The study concludes that strong clusters facilitate growth in entrepreneurship by lowering entry costs, enhancing innovation opportunities, and providing access to a diverse range of inputs and complementary products.