Business startups rise in nearly 2/3 of states; Texas, Austin at top

Texas innovation


Nearly two-thirds of U.S. states had an increase in new businesses last year, as did a majority of the metropolitan areas studied by the Kauffman Foundation.

Thirty states saw gains in business startups, with larger states showing the biggest increases. The top five were Texas, Florida, California, New York and Colorado. Eleven smaller states saw a decline in new companies.

In the 25 smallest states, the five states with the highest startup activity in 2016 were Montana, Nevada, Wyoming, Oklahoma and Alaska. Eleven smaller states had higher Startup Activity Index measures this year.

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Among larger states, those that experienced the biggest positive shift in rank from 2015 to 2016 were New Jersey (18 to 7), Michigan (19 to 11), Minnesota (24 to 21), Texas (3 to 1), New York (6 to 4) and Georgia (14 to 12).

Larger states that saw the biggest negative shift were Illinois (10 to 19), Louisiana (5 to 10), South Carolina (9 to 14), Colorado (2 to 5) and Massachusetts (15 to 18).

Smaller states that saw the biggest positive shift in rank were Oregon (22 to 15), Oklahoma (8 to 4), North Dakota (11 to 7), Wyoming (5 to 3), Mississippi (13 to 11), Nebraska (15 to 13), Arkansas (19 to 17) and Rhode Island (21 to 19).

Smaller states that experienced the biggest negative shift were Utah (6 to 10), Vermont (10 to 14), Maine (16 to 20), Kentucky (18 to 21), Alaska (3 to 5), Idaho (4 to 6), Delaware (14 to 16) and Connecticut (20 to 22).

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Twenty-three out of the 40 metro areas tracked by the foundation also showed gains. The areas with the highest number of new companies were Austin, Texas; Miami, Los Angeles, San Francisco and Las Vegas.

The geographic breakdown, released last week, offers more details from the foundation’s report in June that the national rate of entrepreneurship rose in 2015, ending a decline that began in 2010.

As was the case with the states, the Rate of New Entrepreneurs varied widely across metros. Austin ranked No. 1 in this category, with 600 new entrepreneurs for every 100,000 adults. Last place went to Milwaukee, which tallied 100 new entrepreneurs for every 100,000 adults.

“While there is considerable variation from one locale to the next, the aggregate data bodes well for business startup activity around the country,” said Arnobio Morelix, an analyst at Kauffman, which conducts research on entrepreneurship and education.

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Small business owners who hope to sell their companies — either soon or in the far-off future — should be thinking about how to maximize the profit from a sale. That means making the enterprise more attractive to prospective buyers. SCORE, the organization offering free counseling to small businesses, is sponsoring an online seminar about preparing a company for sale on Thursday, Sept. 15 at 1 p.m. Eastern time. Learn more and register at

Additional information from the Kauffman Foundation report