Innovation Nation: San Francisco, New York, & LA Shine as Top Cities for Startups
Key Takeaways:
- San Francisco ranks as the top city for startups, scoring the highest in multiple metrics including the number of startups created in 2023, accelerators and number of angel groups.
- New York and Los Angeles follow as strong contenders, with significant coworking spaces and support systems.
- Seattle, WA and Boston, MA., also feature prominently due to their operational setup costs and availability of talent.
When starting a business, there are many factors to consider. While location remains important, especially for certain industries, its significance has lessened in today’s remote work environment. Nonetheless, cities still compete to provide the most competitive startup ecosystems. Some cities stand out by offering an ideal environment for entrepreneurs to launch and grow their ventures, nurturing the next generation of innovative companies.
So, to determine 2024’s best cities for startups, we analyzed 108 U.S. cities across key metrics within four categories — support system, funding availability, operational setup cost and availability of talent. The support system category — to which we assigned a higher score in the overall index — included the number of startups, accelerators and incubators. Next, funding availability focused on the number of angel groups and venture capital (VC) opportunities. Then, operational setup cost considered office lease prices, coworking prices for various setups, median income and utility costs. Finally, availability of talent assessed the population with a bachelor’s degree and the unemployment rate among them.
From California Sunshine to New York Skyline: Top Ten Cities Every Startup Should Consider in 2024
Based on our analysis and the weights assigned to each metric, these are the top 10 cities with the highest overall scores:
1. San Francisco
At this point, San Francisco is already synonymous with innovation, and the city continues to consolidate its status as a startup hotbed in 2024, taking first place. With a whopping 361 startups created in 2023 — the highest number among all cities analyzed — San Francisco seems to make up the ideal environment for budding entrepreneurs.
Specifically, with Silicon Valley as its focal point, it ranks best in two of the four categories. Support system and funding availability are strongest in the Golden City out of all the cities on our list. San Francisco is home to numerous successful accelerators and incubators — hello Sand Hill Road — that support startups across various industries, like The Mint by BTV and Greylock Edge.
2. New York
On the opposite coast, New York joins the list of premier spots for startups, taking second place. An impressive 203 startups started here in 2023, profiting from the highest concentration of venture capital opportunities. With a total of 68 VC firms, entrepreneurs in the city benefit from a wealth of options when seeking investment.
Additionally, early-stage startups have the perfect launching pad in the Big Apple, New York also sporting the highest number of incubators. Here, the eight venture launchpads provide startups with vital resources, such as affordable office space, expert mentorship, and invaluable networking opportunities.
3. Los Angeles
Next, Los Angeles joins the list of top startup cities, ranking third. While Los Angeles doesn’t necessarily come to mind as a prime entrepreneurial hub quite like its California counterpart, 68 startups were created here in 2023. However, there is one category where the City of Angels fared better than San Francisco: Operational setup costs are significantly lower, pushing LA into the 73rd spot nationwide in this category, leaving San Francisco behind in 107th place.
Meanwhile, by ranking third in funding availability, Los Angeles provides great investment opportunities for entrepreneurs. As such, it's the perfect spot for those looking to start their new business in a sunny city, following in the footsteps of startup titans like SpaceX, Snapchat and Riot Games.
4. Seattle
Coming in fourth, Seattle reinforces its status as a booming innovator playground, with a mix of a healthy support system — the fifth strongest nationwide — and a robust talent pool. Moreover, with 66% of the population holding a BA, startups based here can tap into a talent pool of highly educated individuals, largely drawn from the nearby University of Washington.
Home to tech giants Amazon and Microsoft, Seattle doesn’t lack funding availability either. In fact, 12 venture capital firms are present in the area. And with competition being less fierce than in Silicon Valley, the 36 startups created in 2023 were able to put their best foot forward in the Emerald City.
5. Chicago
Sitting at number five on our list, Chicago saw the creation of 34 startups in 2023. Here, early-stage companies benefit from one of the best funding availabilities in the nation, with 11 venture capital firms at their disposal.
Moreover, Chicago also ranked fourth-best when it came to the available support system: There were 91 coworking spaces at the disposal of startups and top-ranked incubators, as well as accelerators like Portal Innovations, which has been deemed one of the best in the area. The city also boasts a solid coworking density score of 3.41 per 100,000 residents, providing ample collaborative spaces for startups.
6. Atlanta
Boasting the highest coworking space density nationwide (18.23) Atlanta is the city 16 startups decided to call home in 2023. With four accelerators under its belt, Atlanta has the sixth best support system nationwide.
Moreover, the city’s diverse economy and low unemployment rate of just 2.7% among people with a BA make it an ideal place for young workers. This appeal will further give new ventures a highly educated talent pool to leverage, strengthening Atlanta’s position as one of the best cities for startups.
7. Austin
Austin, TX, has emerged as a beacon for startups due to its lower tax rates. As a result, 61 young companies were founded here in 2023, landing Austin seventh on our list. Moreover, Austin has a notable number of incubators and accelerators, ranking fifth and sixth, respectively.
Austin also boasts a highly educated and skilled workforce - with 53.2% of the population having a BA - thanks to the presence of top-tier educational institutions like the University of Texas at Austin. The city is home to a vibrant tech ecosystem, with a concentration of companies, startups, and innovation hubs. Plus, major tech giants like — Dell, Apple, Google and Facebook — have significant operations in the city, fostering a culture of innovation.
8. Miami
The Southeastern U.S. has another representative on the list, with Miami taking eighth place. More precisely, 38 startups began their venture in this Florida city in 2023, taking advantage of the fourth-strongest support system in the nation. To that end, the Magic City boasts the fifth highest number of accelerators nationwide.
Coworking spaces are also highly accessible for remote workers, freelancers or digital nomads in the Miami area: The city boasted the second-highest coworking space density among the cities analyzed with more than 15 per 100,000 residents (and a total number of 68 spaces).
9. Denver
Despite not standing out in any of the categories analyzed, Denver still managed to create the perfect balance needed to join the list as a total of 19 new ventures were created here in 2023. And with ranking 50th nationwide when it comes to operational setup costs, Denver is the cheapest city to set up shop among the top ten.
Additionally, in terms of supporting new businesses, Denver came in sixth in number of accelerators and incubators - alongside Miami. The city also offers a high coworking space density of 10.66 per 100,000 residents, with 76 coworking spaces available, making it a prime location for collaborative work environments. To top it off, Denver benefits from a highly educated workforce with 57.7% of its population holding a bachelor's degree. The unemployment rate among this group is also relatively low at 2.7%, contributing to a strong talent availability.
10. Boston
Rounding out our list, Boston, ranking 9th nationally for its robust support system, is a city that offers much to entrepreneurs despite not always being seen as a premier startup hub. The city is home to four accelerators and four incubators, supporting new businesses through initiatives like the MassChallenge accelerator, which has aided over 1,300 startups since 2010.
Boston's vibrant venture capital scene ranks 7th in funding availability, with 13 venture capital firms, including notable names like Polaris Partners and Battery. The city's educational landscape, with over 100 colleges and universities, ensures a steady stream of talent readily available to local businesses. with 55.7% of the population holding a bachelor's degree.
Startup Sweet Spots: Top Cities for Startups You Might Have Overlooked
If you're looking for cities that excel in specific areas, Wichita, KS, shines with its affordable operational setup costs, making it a practical spot for startups to get the most bang for their buck.
Meanwhile, Arlington, VA, is a talent magnet with the highest percentage of residents holding bachelor’s degrees – 80% - perfect for startups needing skilled workers. Over in San Jose, CA, you'll find a goldmine of funding opportunities, thanks to its robust network of angel groups and venture capital firms. These cities each bring something special to the table, showing that there's a perfect place for every kind of startup to flourish.
Methodology
The total score was calculated using the following data points and weighting:
Support System - 40%
- Coworking space density: Number of coworking spaces per 100,000 residents. [Commercial Edge (July 2024 – city level)] – 10%
- Start Ups created in 2023 - data from Crunchbase – 30%
- Accelerators (2019-2024) - number of active accelarators that had "last funding" in the past five years (Crunchbase) – 30%
- Incubators (2019-2024) - number of active incubators that had "last funding" in the past five years (Crunchbase) – 30%
Funding Availability- 30%
- Angel Group (2019 - 2024) - number of active Angel Groups that had "last funding" in the past five years (Crunchbase) – 40%
- Venture Capital (2019 - 2024) - number of active VC's that had "last funding" in the past five years (Crunchbase) – 60%
Operational Setup Cost – 15%
- Office Lease Price - Data taken from CommercialEdge – 15 %
- Coworking prices: The coworking subscription prices applied to three different memberships in each city: dedicated desk, virtual office and open workspace [CoworkingCafe (2024 – city level)] – 60%
- Median income: Median earnings in the last 12 months (in 2022 inflation-adjusted dollars) for population aged 16 years and older with earnings. [U.S. Census Bureau – one-year estimates (2022 – city level)] – 25%
Availability of talent- 15 %
- Population with BA - Percentage of population (aged 18 - 34) that holds a BA [U.S. Census Bureau – one-year estimates (2022 – city level)] – 55%
- Unemployment rate (people with BA): Percentage of unemployed population between 25-64 years that hold a BA or higher. [U.S. Census Bureau – one-year estimates (2022 – city level)] – 45%
