The 10 Best States to Launch Your Startup (and 10 to Avoid)

If you’re looking to launch, or join, a start-up business, scope these cities.

Map of the United States showing the top 10 states for entrepreneurs and startups
By Bill Frost | December 4, 2019 3 min read

Whether you’re fresh out of college or considering a new opportunity elsewhere, chances are there’s a promising startup near you—or if you prefer, thousands of miles away. Likewise, if you’re an entrepreneur looking to launch your own startup, you’re no longer limited to Silicon Valley, the Silicon Prairie, the Silicon Slopes, or any of the other “Silicon” locales established a decade ago.

You can’t, however, just throw a dart at a US map and expect overnight success. The non-tech press tends to put forth the narrative that the entire country is in the middle of a constant startup explosion—but this isn’t necessarily true. Previous hotspots have cooled, and new ones have popped up in unexpected areas (North Dakota, anyone?), which means compiling a definitive list requires some number crunching.

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Factors considered

So we crunched those numbers, hard. Business.org studied all 50 states and the District of Columbia and ranked each according to their startup friendliness. Our criteria included factors like these:

Age range and education: We tallied the state’s population percentage of those aged 25 to 34, one of the simpler indicators of a favorable environment for new ideas and businesses. We also factored in the ratio of those 25-to-34-year-olds holding a bachelor’s degree.

Local employment: More bluntly, what’s the joblessness rate of each city? We looked at employment numbers across the US, and every state in our top 10 had 94% employment or higher.

Income vs. rent: How much money will you have to shell out for housing? The numbers we discovered are in-line with growth stats: some of our top 10 states can eat up to 30% of your income in rent each month, but others, like North Dakota and Nebraska, are pretty reasonable.

Startup surges: Finally, we looked at how many startups launched in each state and how many jobs these new businesses created in their first year.

Correlations and key findings

What did all that data crunching lead to? Some pretty interesting facts and figures, if we do say so ourselves:

  • Our top state for startups isn’t actually a state. Per our ratings, the District of Columbia is the best place to start a business. Washington, DC, also has the largest population of young adults on our list; in DC, 25-to-34-year-olds comprise 71.1% of the population. The next-youngest state in this category, Massachusetts, sits at 50.9%.
  • In contrast, West Virginia came in last place for entrepreneurs and startups, even though Alaska, which took 49th, has a higher unemployment rate. Alaska’s unemployment sits at 6.6%, the highest in the nation, compared to West Virginia’s 5.3%.
  • In sunny Hawaii, while the cost of living is high, the unemployment rates are super low—in fact, at 2.4%, they’re the lowest in the nation.
  • Every area but the West Coast makes an appearance in our top 10, from the East Coast to the Rockies to the Midwest. Looks like startup culture isn’t just for surfers and beach bums anymore.
The best states for startups by ranking
RankingStateUnemployment rateRent as percentage of median incomePopulation percentage of 25-to-34-year-olds
Percentage of 25-to-34-year-olds with a bachelor’s degree
1District of Columbia5.6%32.3%71.1%22%
2North Dakota2.6%13.1%34.9%15%
3Colorado3.3%23.8%39.6%14%
4Nebraska2.8%16.0%36.6%13%
5Utah3.1%17.6%32.3%14%
6Delaware3.8%18.4%33.4%13%
7Missouri3.2%18.6%33.3%13%
8Massachusetts3.3%31.9%50.9%14%
9Idaho2.8%19.3%25.8%12%
10Oklahoma3.4%15.0%26.3%14%
11Iowa2.5%14.7%34.3%12%
12Minnesota2.9%21.9%40.1%13%
13New Hampshire2.5%19.0%39.5%12%
14Virginia3.0%25.5%40.5%14%
15Kansas3.4%15.0%34.9%13%
16South Dakota3.0%15.1%31.6%13%
17Vermont2.7%21.6%39.7%11%
18Wyoming4.1%12.7%27.8%14%
19Wisconsin3.0%17.3%34.7%13%
20Montana3.7%15.2%31.8%12%
21Hawaii2.4%24.7%31.1%14%
22New Jersey4.1%26.4%44.0%13%
23Texas3.9%23.4%29.8%14%
24Maryland3.9%21.7%41.6%14%
25New York4.1%36.3%44.2%15%
26California4.2%33.1%34.5%15%
27Connecticut4.1%20.4%42.7%12%
28Georgia3.9%27.6%30.9%13%
29Indiana3.4%17.8%30.0%13%
30Nevada4.6%21.7%22.5%14%
31Arkansas3.7%16.6%24.7%13%
32Florida3.6%30.5%28.8%12%
33Oregon4.2%25.7%33.9%13%
34South Carolina3.4%25.2%28.5%13%
35Michigan4.1%18.4%32.1%12%
36Maine3.4%22.7%33.4%11%
37Illinois4.3%27.6%40.6%14%
38Rhode Island4.1%24.2%38.0%13%
39Washington4.5%28.5%35.9%14%
40Tennessee3.5%28.4%30.8%13%
41Alabama3.9%18.4%26.0%13%
42North Carolina3.9%26.1%32.6%13%
43Kentucky4.3%19.0%27.4%13%
44Pennsylvania4.3%23.1%38.1%13%
45Ohio4.6%16.6%32.7%13%
46Arizona4.8%21.0%27.4%13%
47Louisiana4.9%24.4%26.4%14%
48New Mexico4.9%19.0%23.1%13%
49Alaska6.6%14.5%26.5%16%
50Mississippi4.8%18.1%22.7%13%
51West Virginia5.3%16.3%25.3%12%

The takeaway

In a perfect world, your startup would grow wherever you plant it. But when you start with a creative workforce and low unemployment rate, there’s nowhere to go but up.

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  • George Mattei

    I grew up in New England and have lived in Columbus for 20 years now. While it’s not a major city like Boston or San Francisco, it’s cultural offerings are surprisingly robust for a smaller city.

    • Business.org

      Hi George! I think that is the best part about cities we are seeing exploding with opportunities for start-ups. While there are the cities we have all come to know and love on the list, we are seeing smaller cities, such as Columbus enter and get close to enter the top 10 of our list. We look forward to reexamining the data next year to see what all has changed. -Micah

  • Matthew W. Hall

    Each of these cities are changing rapidly. That’s how startup cities are. Austin was sleepy a decade ago and now has a large varied social life.

    • Business.org

      Makes you wonder which city is next to change rapidly and experience the growth a lot of other cities have! Thanks for your insight Matthew.

  • disqus_dSuONYpBNw

    Overlooked by the rest of the country for decades, Milwaukee has developed its own indigenous culture and vibe. While perhaps a bit risk-averse and conservative, Milwaukee punches well above its weight class with global heavyweights like NML, Rockwell Automation, Fiserv, to name a few. Being just 90 minutes from Chicago and blessed with the best summer weather in the whole US of A, Milwaukee is slowly being “discovered” as the “hidden gem” of American cities.

    • Business.org

      Thanks for responding. We will definitely have to keep an eye on your great city, and maybe even do a follow-up!

  • darla kashian

    Overlay this list with the Amazon HQ list, and there is quite a bit of overlap. Interestingly, Minnesota declined the play to pay with AMZN so we’re not in the final list, so it’s promising to see a robust start-up community absent the elephant.

  • Julie I

    Does anyone else question the rampant ageism evident in the startup community? I will cede the advantage of youth regarding energy that may be devoted to an emergent business, ideas, experience, and contacts are as much the province of the middle-aged. Even, perhaps, the seniors amongst us!

    I am 61. Recently, a start idea of mine generated interest at a Startup Weekend event. (3rd place in competition.) I have one business behind me. Four concepts that have over time moved for my friends laughing at them to generating substantial sales (for someone else). Approximately 70 more concepts across a number of industries -many highly viable, some so-so- that I would love to share. Beyond that, I have a half-century of experience with various markets, proven observational skills, and a strong desire to participate.

    It seems to me that members of this community deprive themselves of resources and disincent potential, potent contributors with the current emphasis. Can we halt this trend before it does more damage?

  • Ian Saari

    Very interesting post!! I did, however, just want to quickly note that it looks like there may have been a small mistake in the “Startup Growth Percent” infographic. There may have just been a mistake in the rank ordering of the “Highest” startup growth percents. I’m seeing that the city summaries in the article list San Jose and Minneapolis-St. Paul as the cities with the two highest startup percentages, while the infographic ranks them as the 4th and 5th highest, respectively.

    Full disclosure: I am a long-time resident of Minnesota and I’ve lived and worked in Minneapolis for several years. While my work revolves around empirical research, statistics and data visualization, I’m sure that any ranking discrepancy only stood out because my totally nonobjective, knee-jerk defense of my home state (“HEY!! I THOUGHT THEY SAID MINNEAPOLIS WAS #1 IN GROWTH?!?”).

    Again, I thought this was a very fun, accessible, yet informative post! And whoever picked the cityscape photos… Wow! Excellent choices! Really made me want to visit or revisit each city from the list. =)

  • Start Up USA

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    Minneapolis, MN attract me a lot. i am not going to start any company but ya if i am going to start in future than i would like to go Minneapolis, MN. Thanks to you for giving a good info for start up.
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