The Top 20 U.S. Cities for Launching a Startup Business

Coworkers brainstorming
Flamingo Images / Shutterstock.com

Are you hoping to launch a successful business? Choosing the right location might go a long way toward helping you achieve your dreams.

If you’re looking for the top cities for your startup, Commercial Cafe has analyzed U.S. cities to determine which are likely to offer an environment conducive to success for early-stage technology startups.

Looking at the 50 most populous U.S. cities, Commercial Cafe considered their scores on relevant factors like:

  • Tech employment growth (the five-year job growth rate among a city’s computer, engineering and science occupations)
  • Startup density (the percentage of a city’s businesses with four or fewer employees that have been active for less than one year)
  • Rent/income ratio (a city’s average rent, as a percentage of the city’s median income)
  • Coworking costs (a city’s average monthly starting price for coworking space, as a percentage of the city’s median income)

With composite scores based on the metrics, these cities make up the top 20:

20. Nashville, Tennessee

Nashville, Tennessee
jdross75 / Shutterstock.com

Total score: 44.55 out of 100 points

In crunching data for its final rankings, Commercial Cafe placed Nashville fourth on the metric of tech employment growth and seventh for startup density.

In fact, according to Inc., this city is moving beyond its reputation for music and has become an incubator for ethical fashion brands and has a large health care economy. The needs of startups in these industries are turning Nashville into a tech hub.

19. Arlington, Texas

Rawpixel.com / Shutterstock.com

Total score: 44.73 out of 100 points

The analysis by Commercial Cafe gave Arlington first place for the affordability of its coworking costs and second for its rent/income ratio.

The Texas metropolitan area that includes Arlington, Dallas and Fort Worth also has the fourth-largest share of American wealth, as Money Talks News recently reported. The metro’s gross domestic product is more than a half-trillion dollars, compared with the nation’s total GDP of about $20 trillion.

18. Columbus, Ohio

Columbus, Ohio
Randall Vermillion / Shutterstock.com

Total score: 46.98 out of 100 points

This city placed first for its rent/income ratio, according to Commercial Cafe. Additionally, Columbus was third on the metric of startup survival rate and in the top 10 cities for millennial population growth.

City Journal, a magazine from the Manhattan Institute for Policy Research, reports that Columbus has been growing at a nice clip, seeing its metro-area population increase by 9% since 2010. Additionally, Columbus is home to one of the largest venture capital firms in the Midwest, Drive Capital.

17. Raleigh, North Carolina

Raleigh, North Carolina
Sharkshock / Shutterstock.com

Total score: 47.97 out of 100 points

Raleigh was recently ranked by Zillow as one of the 10 most affordable U.S. cities for renters, reports Money Talk News, with 23% of the median household income going toward rent.

On top of that, Commercial Cafe’s analysis placed this city fourth for startup survival rate and fifth for nonemployer growth — meaning the average year-over-year growth in the percentage of a city’s tech businesses that have no employees and are subject to federal income taxes.

16. San Diego

REDPIXEL.PL / Shutterstock.com

Total score: 48.43 out of 100 points

San Diego placed second for startup growth rate and sixth for startup density, among the metrics analyzed by Commercial Cafe.

On another metric, San Diego was seventh for Kickstarter success — meaning the share of Kickstarter tech projects in the city that reach their funding goals. Kickstarter is a crowdfunding platform.

15. Dallas

Aneese / Shutterstock.com

Total score: 48.76 out of 100 points

The Texas city placed third on the metrics of coworking cost affordability and startup density, according to the Commercial Cafe report, as well as coming in fifth for its rent/income ratio.

But these aren’t the only factors helping Dallas. The Federal Reserve Bank of Dallas recently reported on the continued expansion of the Dallas and Fort Worth business-cycle indexes, thanks to persistent job growth.

14. Oakland, California

Oakland, California
yhelfman / Shutterstock.com

Total score: 49.37 out of 100 points

Oakland is the third-most sustainably powered city in the U.S., according to Commercial Cafe, and the city’s tech startup scene focuses on equitable and sustainable growth.

Additionally, Oakland is increasingly becoming a haven for those fleeing the high cost of housing in neighboring San Francisco.

13. Minneapolis

Giulio_Fornasar / Shutterstock.com

Total score: 49.56 out of 100 points

With a high quality of life — U.S. News & World Report ranks it the sixth-best place to live in the U.S. — Minneapolis is one of the best cities for startups.

Commercial Cafe points to the Minnesota city’s attractiveness to millennials, as well as the fact that it ranked well for its rent-to-income ratio. Minneapolis placed second for coworking space affordability, with a starting price of about 2.4% of median income.

12. Fort Worth, Texas

Fort Worth, Texas
Dean Fikar / Shutterstock.com

Total score: 49.77 out of 100 points

The city of Fort Worth has been making a point of showing that it’s separate from Dallas, including investing in a tech project called Fort Worth Now.

The city is making an effort to showcase its efforts to innovate, making it a solid place for startups.

Commercial Cafe found that the city ranked third on tech-ed growth and eighth on tech employment growth.

11. Sacramento, California

Sacramento, California
Ed Gavryush / Shutterstock.com

Total score: 49.80 out of 100 points

Sacramento came in at No. 1 on three of the key metrics used for the Commercial Cafe rankings — growth in wages, tech ed and tech employment. Its top spot for tech employment growth reflects the city’s 45% increase in engineering, computer and science occupations over the last five years.

In the last few years, Sacramento has seen a booming economy. Although that might soften in the near future, experts expect the economy of California’s capital to remain relatively strong.

10. Boston

nullplus / Shutterstock.com

Total score: 51.01 out of 100 points

Not only does Boston place high on this list, it also ranks in the top five startup environments worldwide, according to conference promoter TNW.

Commercial Cafe ranked Beantown second for its startup survival rate, another reason to consider the Massachusetts capital for a new venture. Additionally, Boston placed fourth for tech ed and seventh for tech employment growth.

9. Kansas City, Missouri

fizkes / Shutterstock.com

Total score: 51.40 out of 100 points

Kansas City has been rising among measures of the best places to live. Another study recommends Kansas City for having a favorite business environment.

Kansas City was No. 1 on the Commercial Cafe metric of startup growth rate and second for startup density. The city also ranked well for office space affordability.

8. Atlanta

BluIz60 / Shutterstock.com

Total score: 52.55 out of 100 points

Coming in first on the metric of startup survival, Atlanta ranks high on this analysis of U.S. cities. Additionally, according to Commercial Cafe, the city was second for millennial growth and ranked well in the area of talent affordability.

Atlanta continues to be seen as a top business city, with Forbes ranking the Georgia capital No. 11 among the best places for business and careers.

7. Portland, Oregon

Vitpho / Shutterstock.com

Total score: 54.97 out of 100 points

Portland has one of the hottest startup scenes in the country, thanks to its talent pipeline, which is fueled in part by efforts of local leaders to connect would-be entrepreneurs with investors.

Additionally, Portland placed third on the metric of growth in nonemployer firms, according to the Commercial Cafe analysis, and in the top 10 for engineering and science higher education.

6. Charlotte, North Carolina

Newman James / Shutterstock.com

Total score: 55.86 out of 100 points

Charlotte has been declared one of WalletHub’s best cities to start a small business, and Livability, a lifestyle publication, ranks it among the top cities for attracting millennials.

In the Commercial Cafe analysis, Charlotte placed high for its growth among tech ed-certified residents. Additionally, it’s one of the least rent-burdened cities analyzed by Commercial Cafe.

5. San Francisco

oneinchpunch / Shutterstock.com

Total score: 59.02 out of 100 points

San Francisco is a young city: Millennials make up 32.3% of its population, the highest proportion among the cities in the Commercial Cafe analysis. Additionally, the California city placed third in that study on the metric of startup growth.

Even with its notoriously high cost of living, San Francisco remains among U.S. News & World Report’s top 10 places to live in the United States.

4. Denver

Woman hiking in mountains
Larry Barrett / Shutterstock.com

Total score: 59.60 out of 100 points

For those looking for a solid quality of life, Denver ranks No. 2 among the best places to live, U.S. News & World Report says. Colorado’s economy continues to do well, with U.S. News ranking it high among the states.

On top of providing good living conditions, Denver ranked in the top five on Commercial Cafe’s metrics of millennial population growth and tech ed, and was found to have a strong collaborative coworking ecosystem.

3. Seattle

Seattle
cdrin / Shutterstock.com

Total score: 59.78 out of 100 points

Seattle attracted the most millennials in the last five years among all 50 of the cities in the Commercial Cafe analysis, and it ranked second on the metric of tech education.

Additionally, Seattle continues to see strong economic development from legacy companies as well as from the startup scene.

2. Washington, D.C.

Segway tour on Capitol Hill
VIIIPhotography / Shutterstock.com

Total score: 62.47 out of 100 points

The Commerical Cafe analysis placed Washington, D.C., first on the metric of tech education and fifth on startup survival rate, making the nation’s capital one of the best U.S. cities for startups.

Additionally, Amazon has located its second headquarters across the Potomac River from D.C. in northern Virginia, potentially boosting economic development in the region.

1. Austin, Texas

Austin, Texas waterscape
Silvio Ligutti / Shutterstock.com

Total score: 64.46 out of 100 points

Austin remains among the best places to live in the U.S., retaining its No. 1 ranking from U.S. News & World Report for the third year in a row. On top of that, Austin is one of the best cities for starting a small business, making it an attractive choice for entrepreneurs.

In the Commercial Cafe analysis, Austin ranked first for startup density and third for its expansion of the tech jobs market. Additionally, Austin has seen a rather robust infusion of venture capital investment in recent years that continues to expand.

Have you lived in one of these cities? Tell us what it is like there. Post a comment below or at Money Talks News on Facebook.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

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