Startup Nation: A Ranking of Cities and States With New Entrepreneurs

Americans are very bad at giving up. Fortunately.

America has rebounded to become a startup nation: posting its fifth most entrepreneurial year in two decades.

The Kauffman Foundation, which recently released the 2016 Kauffman Index of Startup Activity, found that 30 states have higher levels of new business activity over 2015, and 23 out of 40 metro areas experienced an increase in startup activity. That’s after a two-decade low in 2014.

Reviewing the number of start-ups in high- and low-density states, the index found that Texas led the way among the 25 largest states, followed by Florida, California, New York and Colorado. The highest startup activity in the smallest 25 states were in Montana, Nevada, Wyoming, Oklahoma and Alaska.

Across large cities, Austin, Miami, Los Angeles, San Francisco, and Las Vegas saw the highest number of startups while the largest positive shifts among cities were in Orlando, Kansas City, Cincinnati, Nashville, Detroit, and San Francisco.

New Jersey, Michigan, Minnesota, Texas, New York, and Georgia saw the largest rank increase in new startups in large states, while Oregon, Oklahoma, North Dakota, Wyoming, Mississippi, Nebraska, Arkansas and Rhode Island made the greatest ranking increase among low-population states.

The rankings were determined by evaluating the percent of adults becoming entrepreneurs in a given month; the number who were driven by an opportunity, rather than necessity; and the growth of startups that employed at least one person besides the owner in the past year. The data are pulled from the U.S. Census Bureau and the Bureau of Labor Statistics.

Though new startup activity is still below its peak of a generation ago, the growth of opportunity-driven startups is a good sign, in part because entrepreneurship affects “the well-being of every human on this tiny planet.”

“(E)ntrepreneurship should not be a privilege of the few. Indeed, one of the most powerful things about entrepreneurship is its universality. All communities, cities, and states can become “ecosystems” of entrepreneurial innovation to generate new businesses and jobs,” wrote Victor W. Hwang, Vice President of Entrepreneurship at the Kauffman Foundation, who led the study.

Larger states that saw negative shifts in their ranking for new startups were Illinois, Louisiana, South Carolina, Colorado,  and Massachusetts while smaller states a drop in their ranking were Utah, Vermont, Maine, Kentucky, Alaska, Idaho, Delaware, and Connecticut.

Metros that experienced the biggest negative shift in rank were Virginia Beach, Chicago, Sacramento, Seattle, Indianapolis, and San Antonio.

Read the entire 2016 Kauffman Index of Startup Activity.