10 Best States for Starting a Business
To encourage residents to start their own businesses, states are investing in entrepreneur mentorship programs and pumping up their high-tech workforce.
Maryland, Colorado and Virginia are the three states most supportive of innovation, according to the fourth annual Enterprising States report out this week from the U.S. Chamber of Commerce, a Washington, D.C.-based business advocacy organization.
5 Key Measures
The study measured five aspects of policy, including exports and international trade, entrepreneurship and innovation, business climate, talent pipeline, and infrastructure. States were ranked for their performance in each category. Also, the study measured and ranked overall economic climate and growth in each state. Utah earned the title as the top performing state overall for fostering business growth and creating jobs. It ranked in the top 10 of every policy ranking and came in third overall in economic performance.
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As part of the report, the Chamber of Commerce prepared an interactive map where you can click on any state to see how it stacks up in each category and why.
Here are the top 10 states ranked for entrepreneurship and innovation, as measured by the number of high-tech businesses, programs that support entrepreneurs and STEM (science, technology, engineering and mathematics) job concentration. Each state that made the list has something unique to offer resident entrepreneurs.
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1. Maryland: The Maryland Entrepreneurs Resource List is a networking tool for connecting experienced tech executives with young startup entrepreneurs. The University of Maryland Baltimore County's ACTiVATE initiative, supported by the state's Technology Development Corporation, gives female entrepreneurs over a year of support and guidance as they launch their tech startups.
2. Colorado: In addition to attracting hikers and bikers, the Rocky Mountain state is a hotbed for high-tech businesses and ranks fourth in the country for the number of new businesses born. It has a relatively high concentration of STEM jobs and in the past two years has bolstered its high-tech workforce with an additional 1,100 software programmers, 840 engineers and 675 science research jobs.
3. Virginia: In addition to having the highest concentration of STEM jobs of any state, Virginia has been home to the Center for Innovative Technology since 1985. The CIT's mission is to promote technology-based economic growth in the state and is focused on getting money to more entrepreneurs in the very early, seed round of funding.
4. Utah: The Utah Science, Technology, and Research initiative at the University of Utah, which is dedicated to turning research at the state's universities into commercial businesses, received $6 million in funding in 2012. The state and the governor's office teamed up with Weber State University to offer entrepreneurs courses, mentorship and affordable working space in a program called Startup Ogden.
5. Massachusetts: The New England state, home to some of the most prestigious research institutes in the country, including Harvard University and Massachusetts Institute of Technology, is a hub for STEM jobs. In 2012, the Legislature passed a bill that will allow Massachusetts to invest in several long-term research and development activities, and provide $1 million for paid internships at start-ups and $1 million for a program to mentor entrepreneurs about accessing venture capital funding.
6. Texas: The Lone Star State has more than 2.2 million small businesses, accounting for more than half of its private sector jobs. Since 2009, Texas has ramped up its STEM workforce by 34,000, primarily in the computer and IT fields.
7. Washington: Impact Washington supports manufacturing in the state and has a specific program targeting small manufacturers. Manufacturers can get access to funding through the state's Washington Economic Development Finance Authority's Industrial Revenue Bond program. In addition, the home of software giant Microsoft has a high percentage of STEM workers, with notable concentrations in engineering, science and computer workers.
8. Arizona: The Southwestern state hosts the Arizona Innovation Challenge each year where it gives out $3 million in awards to entrepreneurs. The state encourages investment in small businesses by granting tax credits through its Angel Investment Program, which it has budgeted $20 million for through 2016. Arizona has a Fast Grant program giving winning entrepreneurs funding to use to hire expert consultants and test new products. The goal of the program is to help start-ups transform an innovative new product or idea into a money-making venture.
9. Georgia: Atlanta is relatively active city for venture capital, with 54 startups getting money in 2012, according to the National Venture Capital Association, the venture-capital industry association. The capital city's co-working space, The Atlanta Tech Village, has a waiting list of more than 100 people, a sign of the city's active startup culture. The Georgia Department of Economic Development runs a program, Entrepreneur-Friendly Communities, instructing local areas on how to encourage and foster small-business growth.
10. Florida: While Florida doesn't have much to brag about when it comes to encouraging innovation, the Sunshine State has the highest business birthrate in the U.S., helping it to narrowly secure a spot on the entrepreneurship list. Florida has high growth in self-employed individuals, including the addition of 59,000 personal finance advisors since 2002, 39,000 property managers and 38,000 securities and financial services individuals.
The Chamber of Commerce's report is released in conjunction with the Chamber's Small Business Summit, happening in Washington, D.C., this week, and was prepared by the economic-research firm Praxis Strategy Group.