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Best Places for Startups

The Kauffman Index measures startup activity in all 50 states and focuses on 40 major metropolitan areas as well.   

| BY Kent McDill

All of the cool kids in the business world are entrepreneurs, and all the entrepreneurs get the ball rolling by operating startups.

The opportunity for startups in the United States is improving greatly as businesses, especially those in the technology field, take off from the ground floor and grow from there. There are places in the United States, however, that provide a better environment for startups than others.

The Kauffman Index, an annual study of the atmosphere for startups in America, has announced the current cities and states that are best suited for startups. The report comes from the Kauffman Foundation, which is the largest index tracking entrepreneurs in the United States.

The Kauffman Index studies the rate of new entrepreneurs in each study area, the opportunity share of new entrepreneurs nationwide, and the number of startup firms divided by the total population of a city or state.

In terms of overall startup activity, the cities that ranked in the top 10 last year remained in the top 10 in the 2015 index, led by Austin, Texas, and followed by Miami and San Jose, Calif. San Jose actually ranked highest in opportunity share, while Nashville had the lowest percent opportunity share among the 40 cities measured.

The rest of the top 10 cities for startup activity are Los Angeles, Denver, San Francisco, New York, Houston, San Diego and San Antonio. Interestingly, only two of the top 10 cities are east of the Mississippi.

Austin averaged 550 new business startups per month on average to top the list.

Among states, startup activity was higher for 32 of the 50 states in 2015 than it was in 2014. The five states with the highest startup activity in the 2015 measure were Montana, Wyoming, North Dakota, Colorado and Vermont. Most of those states are enjoying large increases in Gross Domestic Product, which is seen as a facilitator of startup activity.

“Historically, the Plains and Rocky Mountain regions have not been thought of as hotbeds of entrepreneurial activity,’’ said Kauffman Foundation research analyst Arnobio Morelix. “But entrepreneurship is closely associated with economic growth, so it should not be surprising that some of the states seeing increased levels of startup activity have experienced high rates of real GDP expansion in recent years."

Finishing last in terms of the rate of new entrepreneurs by state was Wisconsin, with a rate of 170 startups per 100,000 adults per month. By contrast, Montana had 540 startups per 100,000 adults per month in the study period.


About the Author

Kent McDill


Kent McDill is a staff writer for Millionaire Corner. McDill spent 30 years as a sports writer, working for United Press International and the Daily Herald of Arlington Heights, Ill. From 1988-1999, he covered the Chicago Bulls for the Daily Herald, traveling with them every day through the nine-month season. He also covered the Bulls for UPI from 1985-88, and currently covers the team for www.nba.com. He has written two books on the Bulls, including the new title “100 Things Bulls Fans Should Know And Do Before They Die’, published by Triumph Books. In August 2013, his new book “100 Things Bears Fans Should Know And Do Before They Die” gets published.

In 2008, he resigned from the Herald and became a freelance writer. The Herald hired him to write business features and speeches for the Daily Herald Business Conferences and Awards presentations.

McDill also writes a monthly parenting column for the Herald’s Suburban Parent magazine.

McDill is the father of four children, and an active fan of soccer, Jimmy  Buffett and all things Disney.