Placing No. 2 on the list is Chicago. In the Windy City, an abundant technology talent pool has helped drive the growth of entrepreneurship, according to Ted Devine, CEO of Insureon, a small-business insurance provider based there that has grown to 183 employees since it was founded in 2000.
"The quality of the technology resources we have is incredibly high," said Devine, pointing to the city's 10 academic computer science programs, eight coding boot camps and abundance of business incubators.
While overhead for small businesses is not low in Chicago, it is not as steep as in other major cities. "To start a business, the square-footage cost is basically half of what it is in New York or San Francisco," said Devine. Chicago's total occupancy costs ranged from $27 to $50 in 2014, according to CBRE's Prime Office Occupancy Costs study for (2014), compared to $83 to $121 for New York and $68 to $108 for San Francisco
No market is perfect, of course. It can take small businesses more than a month to get a business license in Chicago because of bureaucracy, according to Jeff Carter, manager at West Loop Ventures, a Chicago-based venture fund focused on seed and series A investments.
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But that hasn't kept more scalable firms from taking root. "I don't see a vibrant small-business mom-and-pop community, but I see a very vibrant technology start-up community the rest of the world really doesn't see," said Carter.