Being home to Silicon Valley gets California the reputation as a dreamland for start-ups. But it's a big state with lots of cities, and outside of the San Francisco Bay area — and the Los Angeles–San Diego entrepreneurial region — California is pretty harsh territory for business owners.
CNBC's recent ranking of entrepreneurial hot spots, the CNBC Metro 20: America's Best Places to Start a Business, evaluated the likelihood of start-up success in 107 metro areas across the United States, taking into account factors including tax rates, regulatory environment, cost of living, cost of labor, unemployment level and population growth. No California city made the top 20. But five California towns were among the 10 worst metro areas — among all 107 — to launch a business.
That's a noteworthy corrective for a state synonymous with start-up star power.
"There are big gaps in many parts of the country — and also within many states," said entrepreneur and AOL co-founder Steve Case in an email to CNBC. "Yes, the U.S. continues to be the most entrepreneurial country in the world, but there are some pockets where there is momentum and many places that are lagging. ... California is the classic example," Case said. In 2005, Case co-founded investment firm Revolution, which focuses on start-up activity outside of Silicon Valley and other nationally known start-up hubs.