This paper examines the role of regional clusters in regional entrepreneurship. It focuses on the distinct influences of convergence and agglomeration on the growth in the number of start-up firms and employment in these new firms in a given region-industry. While reversion to the mean and diminishing returns to entrepreneurship at the region-industry level can result in a convergence effect, the presence of complementary economic activity creates externalities that enhance incentives and reduce barriers for new business creation. Clusters are a particularly important way 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. Using this dataset, there is significant evidence of the positive impact of clusters on entrepreneurship. After controlling for convergence in start-up activity at the region-industry level, industries located in regions with strong clusters experience higher growth in new business formation and start-up employment. Strong clusters are also associated with the formation of new establishments of existing firms, thus influencing the location decision of multi-establishment firms. Finally, strong clusters contribute to start-up firm survival. The paper finds striking evidence for the simultaneous yet distinct influences of agglomeration and convergence on the growth rate of start-up establishments and employment. Growth in start-up employment at the region-industry level is declining in the initial level of start-up employment, consistent with the presence of a convergence effect. At the same time, growth in start-up employment is increasing in measures of the cluster environment surrounding the region-industry. The results provide support for the hypothesis that strong clusters facilitate growth in entrepreneurship. The paper also examines the role of clusters in the medium-term performance of start-ups. A strong cluster should increase the productivity of participating firms, which raises the bar for survival of new businesses. At the same time, a strong regional cluster can facilitate the growth of start-up firms by providing better access to the necessary inputs to commercialize products and services. The paper finds that a strong cluster environment improves the level of employment in young start-up firms in a region-industry, suggesting that clusters facilitate medium-term survival of start-ups. The findings support the idea that clusters of related and complementary industries facilitate the growth in the formation of new businesses and the medium-term performance of start-ups in regional industries.This paper examines the role of regional clusters in regional entrepreneurship. It focuses on the distinct influences of convergence and agglomeration on the growth in the number of start-up firms and employment in these new firms in a given region-industry. While reversion to the mean and diminishing returns to entrepreneurship at the region-industry level can result in a convergence effect, the presence of complementary economic activity creates externalities that enhance incentives and reduce barriers for new business creation. Clusters are a particularly important way 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. Using this dataset, there is significant evidence of the positive impact of clusters on entrepreneurship. After controlling for convergence in start-up activity at the region-industry level, industries located in regions with strong clusters experience higher growth in new business formation and start-up employment. Strong clusters are also associated with the formation of new establishments of existing firms, thus influencing the location decision of multi-establishment firms. Finally, strong clusters contribute to start-up firm survival. The paper finds striking evidence for the simultaneous yet distinct influences of agglomeration and convergence on the growth rate of start-up establishments and employment. Growth in start-up employment at the region-industry level is declining in the initial level of start-up employment, consistent with the presence of a convergence effect. At the same time, growth in start-up employment is increasing in measures of the cluster environment surrounding the region-industry. The results provide support for the hypothesis that strong clusters facilitate growth in entrepreneurship. The paper also examines the role of clusters in the medium-term performance of start-ups. A strong cluster should increase the productivity of participating firms, which raises the bar for survival of new businesses. At the same time, a strong regional cluster can facilitate the growth of start-up firms by providing better access to the necessary inputs to commercialize products and services. The paper finds that a strong cluster environment improves the level of employment in young start-up firms in a region-industry, suggesting that clusters facilitate medium-term survival of start-ups. The findings support the idea that clusters of related and complementary industries facilitate the growth in the formation of new businesses and the medium-term performance of start-ups in regional industries.