We're constantly watching everything that's going on in the startup scene. In 2019, Stanford Graduate School of Business, which for many years shared first place with Harvard Business School, took the lead in the number of new businesses founded by its graduates. On the one hand, this is legitimate, given that Stanford is in the heart of Silicon Valley; on the other hand, it is still odd that Harvard, which graduates over 900 MBAs a year, is behind Stanford, where that number does not exceed 500.
A long study of data on startups and entrepreneurial programs at top business schools makes one thing clear: Location is critical!
Small businesses are like trees: they need fertile soil to survive. When an entrepreneur finds a favorable business environment - and when their "Great Intent" is aided by good fortune - a miracle happens. After all, Uber, for example, began with an idea, and then the company had investors and a loyal clientele, which allowed it to become a multinational giant that now dominates the market.
Where do you find the most conducive environment for your "Great Idea"? E-commerce platform Volusion, which supports small businesses, has published its annual list of the best U.S. cities to create and grow startups. This year's top spot went to Seattle, Washington. (Seattle is home to several startups that made the list in terms of venture capital, such as Booster Fuels and FlyHomes.)
Also in the top five were Austin-Round Rock, Texas (No. 2), San Jose-Sunnyvale-Santa Clara, California (No. 3), Nashville-Davidson-Merfreesboro-Franklin, Tennessee (No. 4) and Denver-Aurora-Lakewood, Colorado (No. 5).
"Some startups become successful over time, but not all manage to grow," writes Kevin Fowler, head of SEO at Volusion. - If you choose a city with a favorable business environment, it will help you find talent, increase your chances of getting funding, and reduce your tax and business costs. A startup's survival may depend on its location.
The most favorable urban agglomerations for startups
Not only is Seattle home to the headquarters of major companies such as Amazon, Microsoft, and Starbucks, it is also one of the most attractive cities on the West Coast for aspiring entrepreneurs - and for good reason. According to Fowler, 1.9 percent of firms in Seattle receive venture capital investment. That's the highest rate of any major U.S. city. Plus, the local government actively supports the development of startups and small businesses by offering them special grants through the "Just Seattle" initiative, which aims to "foster innovation in key neighborhoods and sectors." What's more, the Washington state government does not charge startups an income tax to "help budding entrepreneurs."
Another influential player in Seattle's business ecosystem is the Foster School of Business at the University of Washington, best known as a technology hub, with 60 percent of its graduates going to work in the industry.
The business school also has the 24th-highest number of entrepreneurs among its former students in the United States, according to U.S. News & World Report. Overall, the business school is known for employing 99 percent of its graduates. Typically they work for major Seattle companies, but recently more and more Washington Foster alumni have been starting their own businesses.
The situation is similar in the metropolitan area, which ranked second on Volusion's list. Fowler writes that Austin is "rapidly becoming a hotbed of new ventures, particularly in the tech industry. The low cost of living and doing business has made Austin an attractive alternative to big cities like New York and San Francisco.
In addition, the University of Texas has more than 50,000 students, making it an ideal place to find new talent. The University's Austin Technology Incubator and Techstars Austin gas pedal offer many resources for entrepreneurs ready to embark on new ventures." Austin is home to RigUp, which has repeatedly made lists of successful startups.
As Fowler points out, no ranking of optimal places to grow startups is without Silicon Valley, which ranked third on the list this year. The density of startups in San Jose, the valley's largest city, is 10.1 percent, 9.7 percent higher than the national average. And the percentage of firms receiving venture capital investment is more than three times higher than the national average.
As Fowler points out, no ranking of optimal places to grow startups is without Silicon Valley, which ranked third on the list this year. The density of startups in San Jose, the valley's largest city, is 10.1 percent, 9.7 percent higher than the national average. And the percentage of firms receiving venture capital investment is more than three times higher than the national average.
Startups drive job growth, which benefits the economy
The Volusion platform uses an interesting methodology to create a list of the best cities for entrepreneurship in the United States. It analyzes data from the U.S. Census Bureau's Annual Entrepreneurial Survey, the U.S. Bureau of Economic Analysis Regional Price Parity, and the 2017 U.S. Census Bureau Community Survey Microdata Sample for Public Use. U.S. Census Bureau. A composite score is then calculated based on startup density (the percentage of all firms that have been around for two years or less), small business density (the percentage of all firms with fewer than 50 employees), the number of firms receiving venture capital investment, cost of living, and other factors.
The survey asks the following question: how many business owners do not consider "not working" to be an important factor in starting their own business? This allows us to find out other motives of entrepreneurs, such as not wanting to submit to anyone, finding opportunities to realize their creative ideas, wanting to work flexible hours, etc. It also counts the number of recent college graduates among city residents. This figure indicates the availability of workers who can become employees of startups.
Regardless of the success of each individual venture, startups as a whole play a vital role in driving innovation, developing new solutions and creating jobs.
"Remarkably, the majority of entrepreneurs in the U.S. (76.8%) didn't start a business because they didn't have a job. Nonetheless, starting a business from scratch is extremely challenging. Startups face many challenges related to financing, production costs, and finding the skills and resources needed to expand. For example, only 0.48% of startups receive venture funding. Factors that increase the likelihood of success include: reduced overhead, availability of talented applicants for positions, access to capital, and access to other startups and ideas.
Startups make up 9.2% of all businesses in the country, but not everywhere is a favorable environment for their development
As with established businesses, the number of startups depends on the state of the economy, he said. For example, before the global economic crisis, the number of young enterprises reached a record 457,223, but in just four years, from 2006 to 2010. - that number plummeted to 326,091. Since then, startups have regained their lost ground, but their numbers have still not reached pre-crisis levels. According to Fowler, in 2018 there were 416,853 firms that lasted less than a year.
The advantage of startups is that even during economic downturns, they continue to drive job growth, which benefits the economy!
"Compared to established businesses, startups create more jobs despite lower overall employment. In 2018, startups created 1,700,208 jobs, while established businesses created only 518,384. Notably, established companies lost many jobs during the Global Economic Crisis - including four million in 2010. - While the number of jobs in startups did continue to grow. Like the number of new startups, the job growth numbers driven by young companies are gradually increasing, but still have not reached pre-crisis levels."
Ten best U.S. cities for entrepreneurs
Volusion's new list is based on U.S. government data and takes into account factors such as the density of small businesses, cost of living and other data, including the results of the U.S. Census Bureau's Annual Business Survey. Which is the best city for aspiring entrepreneurs? Seattle, WA.
