Austin, TX Market Insights

Top 20 U.S. Cities for Kickstarting Your Startup

Landing a job with a corporation is often the goal of many recent graduates, given the career boost it can offer to those rich in education, but somewhat lacking in professional experience. However, over time, more millennials are looking to take their newly acquired hands-on experience- combined with their expensive education- and work for themselves. Startups create a large number of jobs each year, which directly influences the economy of the cities in which they choose to open their headquarters. So, where is the best place to launch a startup?

According to a study conducted by CommercialCafé, California and Texas are the best states for startups, each with four cities in the top 20. Austin is not only in the top but is the best city for planting the roots of your business. Using data from the U.S. Census, the analysis looked at wage growth, tech employment growth, tech education growth, and millennial population growth to determine the rankings. Below are the top 20 U.S. cities for entrepreneurs to make their businesses thrive.

1. Austin, TX

Austin took the honor as the best city for startups given its density and non-employer growth, ranking first in both. It ranked third in terms of expansion of the tech jobs market. The millennial population increased by 14% between 2013 and 2017; it now represents 31% of the city’s overall population, placing Austin fourth in this category. Additionally, the financial investment of $1.3 billion increased the diversity in the tech scene. Austin is expected to continue leading the pack in startup cities for a while.

2. Washington, DC

The second-best city for startups is Washington, which ranked first overall for tech education. In 2017, 12% of its residents aged 25 to 39 held a bachelor’s degree or higher in science and engineering. The city also came in fifth for startup survival rate; in 2018, estimates showed that more than 60% of new companies with up to four employees remained active past their first year.

3. Seattle, WA

Millennials are attracted to Seattle, which saw a five-year increase of 16% in this population group leading to a representation of 32% of its population. It follows D.C. in tech education, with 11.5% of residents holding a degree in the field. However, despite the talent both from and flocking to the city, local investor support could help sustain the startup scene and allow for more to be created at a faster rate. For example, the number of startups grew by just 1.6% year-over-year in 2018, while non-employer tech firms grew 2.5% in the same period.

4. Denver, CO

Fourth on our list, Denver ranked among the top five cities for both tech education and millennial population growth. An appealing city for younger generations, 8% of its residents aged 25 to 39 have a degree in tech education; 32% of its population is made up of millennials. Furthermore, the city is also known for its characteristic collaborative dimension, which attracts entrepreneurs and makes the startup community even stronger.

5. San Francisco, CA

San Francisco is number five on the list of best cities for startups, and leads the way with the highest share of millennials at 32.3%. Of residents ages 25 to 39, 11.4% have a science and engineering bachelor’s degree or higher. What’s more, 4% more startups were founded between 2017 and 2018. However, despite all of these excellent scores, Fog City is ranked number 18 for its startup survival rate goes, which- to some extent- threatens its potential to attract young talent.

6. Charlotte, NC

Queen City, with an established reputation as a thriving fintech hub, is living up to its name. With the number of tech ed-certified residents older than 25 going up 15.4% in five years, it comes in at second place for this category. Many local funding programs are in place to keep both the locals and the startups thriving; the city saw a five-year increase of 3.2% in the number of non-employer firms. Charlotte is also ranked among the less rent-burdened cities on our list, making it an ideal place for newcomers as they look for rentals.

7. Portland, OR

Portland is the seventh-best city for startups, but it took third place for an increase in non-employer firms, with a 3.3% growth over five years. Furthermore, it ranked among the top 10 for higher education in science and engineering, with 6.8% of the population aged 25 to 39 holding a bachelor’s degree or higher. It’s also the 18th city for tech employment growth seeing a 10% increase in computer, engineering and science-related jobs.

8. Atlanta, GA

Of the cities analyzed, Atlanta has the highest score for startup survival; in 2018, 61.5% of firms with up to four employees were still active past their first year. Large universities, such as Georgia Tech and Emory University, have earned Atlanta a reputation as a tech hub. It ranked second for tech employment growth, showing a 38% increase in this field. To top it off, Atlanta ranked fourth for affordable tech wages, and is among the top 10 cities for co-work costs and rent affordability.

9. Kansas City, MO

Kansas City ranked first for startup growth rate- with a year-over-year increase of 6.2% in 2018- and second for startup density. As far as tech employment growth goes, it placed sixth with a 29% increase in jobs in the technology field. It is also considered an affordable city, ranking third for rental affordability. However, it also ranked 13th for startup survival rate and 19th for tech ed growth.

10. Boston, MA

Boston– one of the best cities in the nation for its sturdy environment for biotech innovation and development- is ranked second for startup survival; 65% of firms with up to four employees were active past their first year in 2018. It also placed fourth for tech ed and seventh for tech employment growth. While it is one of the more expensive cities, ranking 20th for rent affordability, millennials are still highly attracted to it; their number in the city grew by 13%.

11. Sacramento, CA

Considered a hidden gem for its rich talent pool of computer programmers tailored by the prestigious universities in the area, Sacramento is indeed a sought-after city. It ranked first on our list for both the greatest increase in its tech-educated talent pool (16.6%) as well as for tech employment growth, with a 45% increase in just five years. Furthermore, it also placed first for wage growth, however it has the slowest average increase in median income.

12. Fort Worth, TX

Fort Worth has many efforts in place to capture and sustain economic development, making it a great location for startups. It ranked fourth for most-affordable housing, and is among the country’s least rent-encumbered cities. It also ranked third for tech ed growth with 13.2% of its 25 to 39 aged population having a tech-related degree. Similarly, it ranked eighth for tech employment growth, seeing a 25% increase in the number of computer, engineering and science positions.

13. Minneapolis, MN

Benefiting from a collaborative community, great location and affordable lifestyle, Minneapolis ranks sixth among the cities most attractive to millennials; it recorded a 13% increase in the millennial population in five years. It also ranks 13th for both wage growth and housing affordability on our list.

14. Oakland, CA

Known for its diversity, Oakland comes in at 14th place overall on the list of best cities for startups. It ranks ninth for startup density and third for startup growth rate, but only 18th for startup survival. With limited local funding for early-stage enterprises, entrepreneurs must assume a certain level of risk when deciding to start their company in Oakland. However, the city ranked 12th for tech employment growth, and the number of tech-related jobs has expanded by 21%.

15. Dallas, TX

Dallas is one of the most affordable cities on our list, ranking third in this category. A tech salary can stretch a long way, as the city ranked fifth for rent-to-income-ratio. However, Dallas landed in the eighth spot for tech ed growth, as demonstrated by its 9% increase in the number of residents aged 25 and older with a science and engineering bachelor’s degree or higher. As far as a location for new businesses, it came in third for startup density and 10th for startup survival rate.

16. San Diego, CA

With the second-highest startup growth rate in our top 20, San Diego saw a 4.5% year-over-year increase in the number of startups launched in 2018. It ranked sixth for startup diversity, thanks to 15.4% of these businesses still operating within their first year. However, with about 50% of them active past their first year, San Diego ranked 20th for startup survival rate. Known as “America’s Finest City,” it is also one of the fastest growing with a 12.4% increase in the number of millennials between 2013 and 2017- making up 27% of the city’s population.

17. Raleigh, NC

With advantages such as universities producing top talent, a competitive cost of living and support networks, Raleigh placed 11th for startup density and fourth for startup survival rate. Of its residents aged 25 to 39, 7% held a bachelor’s degree or higher in science and engineering in 2017. This number increased 10.7% in five years, placing the City of Oaks in sixth place for tech ed and tech ed growth.

18. Columbus, OH

Columbus ranked third for startup survival rate, with 64.8% of the businesses being active past their first year. However, it ranked 18th for startup density, with only 12.4% still in their first year of activity. The city is also the least rent-encumbered city on our list; the average local rent accounts for approximately 13.6% of the median income for computer, mathematical, architecture, and engineering occupations.

19. Arlington, TX

Arlington ranked first for co-work cost and second for housing affordability on our list. With millennials making up only 22.2% of its population, the city ranked 20th for population percentage of this group. Just 2.1% of its residents aged 25 to 29 hold a degree in a tech-related field, causing Arlington to come in at 20th place for tech ed. However, the city placed third for startup density, with 15.6% of startups with up to four employees still in their first year of activity. Furthermore, 62.7% were active past their first year, which put Arlington in 10th place for startup survival rate.

20. Nashville, TN

The city’s hiring market for computer, engineering, and science education occupations expanded by 36%, which put it in fourth place for tech employment growth. About 3.8% of the Music City’s population aged 25 to 39 held a bachelor’s degree or higher in science and engineering, placing it in 16th place for tech ed. And, with 15.1% of the startups still in their first year of operation in 2018, Nashville ranked seventh for startup density. The 61.1% that were active past their first year placed it in 15th place for startup survival rate.

For the full methodology on the data presented in this study, check out the full article.

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About the author

Sanziana Bona

Sanziana Bona is a creative writer and researcher for RENTCafé, with a strong passion for the dynamic real estate market, covering topics from lifestyle to market trends. She has a B.A. in International Relations and Spanish from Michigan State University, a LL.M. in International Business Law, Contracting and International Relations from Instituto Superior de Derecho y Economía. You can connect with Sanziana via email.

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