Top 5 States for Entrepreneurship

It’s not enough just to have an idea. And no matter how strong your entrepreneurial spirit, there is one thing that has a major impact on the success of any venture: location.

Recent studies have confirmed that where you start and run your business has a proven impact on the potential for your success. The findings have been reported in two exhaustive studies: the State Entrepreneurship Index published by the University of Nebraska-Lincoln and the 2010 State New Economy Index , produced by the Ewing Marion Kauffman Foundation and the Information Technology and Innovation Foundation.

Not surprisingly, the current recession has been a major factor for entrepreneurs in some of the lower-performing states, with sectors in the mid-west struggling at all-time lows for new business formation and startup success. However, the traditional model of economic development seems to be going strong in states that have long been associated with the entrepreneurial spirit, like the Northeast and California. These regions have been able to maintain their startup potential because they’ve got the investors already in place and also possess a high concentration of experienced entrepreneurs, allowing them to create high-income entrepreneurship despite the negative impacts suffered in poor economic conditions.

Both reports focus on a similar set of benchmark factors, including percentage growth in business establishments, per capita growth in business establishments, business formation rate, patents per thousand residents and the gross receipts of sole proprietors and partnerships per capita. However, there are some notable differences between the two.

 

[Dhruv Bindhani]

It’s not enough just to have an idea. And no matter how strong your entrepreneurial spirit, there is one thing that has a major impact on the success of any venture: location.

Recent studies have confirmed that where you start and run your business has a proven impact on the potential for your success. The findings have been reported in two exhaustive studies: the State Entrepreneurship Index published by the University of Nebraska-Lincoln and the 2010 State New Economy Index , produced by the Ewing Marion Kauffman Foundation and the Information Technology and Innovation Foundation.

Not surprisingly, the current recession has been a major factor for entrepreneurs in some of the lower-performing states, with sectors in the mid-west struggling at all-time lows for new business formation and startup success. However, the traditional model of economic development seems to be going strong in states that have long been associated with the entrepreneurial spirit, like the Northeast and California. These regions have been able to maintain their startup potential because they’ve got the investors already in place and also possess a high concentration of experienced entrepreneurs, allowing them to create high-income entrepreneurship despite the negative impacts suffered in poor economic conditions.

Both reports focus on a similar set of benchmark factors, including percentage growth in business establishments, per capita growth in business establishments, business formation rate, patents per thousand residents and the gross receipts of sole proprietors and partnerships per capita. However, there are some notable differences between the two.

This article from February 3, 2012, highlights the significant impact of business location on the success of entrepreneurial ventures, drawing insights from two major studies.

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The Crucial Role of Location in Entrepreneurial Success​

The article asserts that having a great idea and a strong entrepreneurial spirit are not enough for business success; location plays a major, proven role. This assertion is supported by findings from two comprehensive studies: the State Entrepreneurship Index by the University of Nebraska-Lincoln and the 2010 State New Economy Index by the Ewing Marion Kauffman Foundation and the Information Technology and Innovation Foundation.

Impact of Economic Conditions:

The ongoing recession at the time of the article's publication (2012) was noted as a significant factor, with states in the Midwest experiencing record lows in new business formation and startup success. In contrast, regions traditionally associated with strong entrepreneurial activity, such as the Northeast and California, demonstrated resilience. These areas maintained their startup potential due to:

• A pre-existing concentration of investors.
• A high density of experienced entrepreneurs.

These factors allowed these regions to foster "high-income entrepreneurship" even amidst negative economic conditions.

Benchmark Factors for Measuring Entrepreneurship:

Both reports used a similar set of benchmark factors to assess entrepreneurial success across states:

• Percentage growth in business establishments.
• Per capita growth in business establishments.
• Business formation rate.
• Patents per thousand residents.
• Gross receipts of sole proprietors and partnerships per capita.

While sharing common metrics, the article briefly notes that there were "some notable differences" between the two studies, though it doesn't elaborate on those distinctions.

In essence, the article from 2012 underscores that the geographical context of a business launch is a critical determinant of its potential for success, influenced by factors like the economic climate, access to capital, and the presence of an experienced entrepreneurial ecosystem.

 

[StartupTalk_KG]

Location Still Matters — But It’s Evolving Fast

This is a fascinating topic — geography has always played a role in entrepreneurship, but the *definition of a “top state” is evolving rapidly*, especially post-pandemic.

While states like California, Texas, and Florida traditionally dominate U.S. startup rankings, I’d argue that in today’s digital-first age, we need to think about *infrastructure + community + cost-efficiency*, not just funding density.

Here are three angles I believe matter more than ever when evaluating a location’s startup potential:

1. Remote-Friendly Ecosystems

We’ve entered the “borderless startup” era. Platforms like Deel, Stripe Atlas, and Zoom have made it possible to build global teams from anywhere.

So while states like Utah or North Carolina may not have the branding of Silicon Valley, they **offer better affordability, lower taxes, and faster time-to-scale** for bootstrapped founders.

2. Local Talent + University Pipelines

States with strong university ecosystems (like Massachusetts with MIT/Harvard or Georgia with Georgia Tech) consistently churn out both talent and innovation.

I’ve seen founders build sustainable companies just by tapping into nearby student communities for internships, research, and feedback loops.

3. Global Comparison — India & Africa Rising

Since I work with founders globally, I’ll also add that places like *Bengaluru, Nairobi, and Cape Town* are rising as entrepreneurship hubs thanks to:

* High mobile adoption
* Government startup incentives
* Huge untapped market potential

A future list might include *global* regions, not just U.S. states.

Questions for fellow members:

* Which factors matter most to you when choosing where to launch — funding, cost of living, talent access?
* Have you launched or relocated your business based on local policies or startup ecosystems?

Would love to hear others’ real-world experiences on how location impacted their journey!