Eager entrepreneurs often wonder where they should go to start their business. For those in tech, for instance, moving to the Bay Area seems like a no-brainer. However, the cost of living could potentially outweigh the benefits, especially if you expect the business to be in the red for a few years. For those who focus on creating local businesses, the resources, including talent and government incentives, as well as how robust the business scene is, could make or break one’s dream.
To help motivated entrepreneurs identify the best city to start their business in, we reviewed the country’s 100 largest cities and scored them based on their labor market, economy, funding opportunities, policies, and housing affordability, then ranked them to find which cities are the best for entrepreneurs. The following includes our findings:
Key Findings
- Fremont, CA, is the best city for entrepreneurs thanks to its high labor market, economy, and funding scores. The city boasts a total score of 91.50.
- California is an appealing state for entrepreneurs. Five cities in this state rank in the Top Ten Best Cities list: Fremont, San Francisco, Oakland, Santa Clarita, and Irvine. It’s worth noting, however, that while these Californian cities scored above average on talent and resources, the high cost of living will be a major blockage for aspiring business founders.
- Nine of the Top Ten Cities reside on the East and West coasts. Lubbock, TX is the outlier, and it came in second place.
- New Orleans, LA, is the least appealing city for entrepreneurs on our list. The city has lower business scores and funding opportunities than other areas in the region.
These Are the Top 10 Best Cities for Entrepreneurs
1. Fremont, CA
Fremont is the best city for entrepreneurs in 2024, with a total score of 91.50. The city boasts a robust labor market and talent pool, making it appealing for those looking to hire workers and scale their budding companies. Fremont has many available resources, like summits and fundraising opportunities, so new entrepreneurs can find their footing and get their businesses off the ground. The city features a strong tech sector but also hosts plenty of small businesses across other industries like life sciences, manufacturing, and consulting.
2. Lubbock, TX
Entrepreneurs can consider living in Lubbock thanks to its strong economy and housing affordability scores. There is a strong presence of businesses across the city, and entrepreneurs can tap into multiple resources and funding opportunities to develop their startups. Buyers in this city can afford more property than they would in other business-centric cities along the east and west coasts, which can benefit budding entrepreneurs working from home.
3. San Francisco, CA
San Francisco comes in third on our list with a score of 88.88. The city still plays a significant role in in the tech industry, and those looking to start their own businesses in the sector can benefit from the area’s strong economy and resources. Many residents have university degrees and generate high incomes, making the city appealing to those looking to hire talented workers.
4. Oakland, CA
Entrepreneurs can live in Oakland to find a stable economy, talent pool, and resources. The city ranks favorably among most categories, making it an appealing option to those avoiding San Francisco or other larger cities nationwide. Entrepreneurs access plenty of resources, such as the Emerging 100 program, which offers grants, mentoring, and training.
5. New York, NY
New York City provides plenty of networking and funding opportunities for new businesses. It’s also a city full of college graduates, allowing entrepreneurs to recruit top talent to scale their growth.. However, the city also has the least affordable housing market of any city on the Top Ten list, meaning those looking to start their businesses here can expect to spend more money on their mortgages and other day-to-day expenses.
6. Jersey City, NJ
Entrepreneurs looking to avoid New York City may want to consider Jersey City instead. The city has a large pool of potential employees, and a robust economy. Additionally, the city features lower housing costs than most cities on our list, making it an exciting option for those looking to purchase a home in the coming years.
7. Boston, MA
Boston is the third of three East Coast cities on our Top Ten list. There are fewer funding opportunities in Boston than on the West Coast, but entrepreneurs in this city will still find an enticing economy and labor market that leaves room for start ups to flourish. The city has one of the strongest policy scores due to its numerous resources, like the Economic Development Incentive Program.
8. Santa Clarita, CA
Santa Clarita also has the most affordable housing market of the California cities in our Top Ten list. Those looking to take advantage of the state’s resources may consider moving here to save on housing costs. Additionally, the city does not have gross receipts tax or utility user taxes, which can help entrepreneurs cut costs even further.
9. Irvine, CA
Irvine has the second-strongest economy score on our Top Ten list, giving potential entrepreneurs the opportunity to expand their businesses over the coming years. Like the other California cities on our list, Irvine benefits from the state’s abundant resources and strong economy. However, Irvine has fewer funding opportunities than other cities, making it less advantageous for those seeking investments.
10. Seattle, WA
Seattle features the most substantial policy score on our list, boasting programs and tax credits for entrepreneurs. Entrepreneurs can join multiple networks to build leadership skills and attend events, then also partake in tax incentive programs to lower their operating costs. Potential residents should note that the city has significantly fewer funding opportunities than the others on our Top Ten list, but it hosts a more affordable housing market.
California Cities Offer More Resources for Entrepreneurs
Five of the cities on our Top Ten list reside in California due to the state’s numerous resources, tax incentives, and funding opportunities. Entrepreneurs have access to business assistance programs that explain compliance and permits, helping newer businesses navigate the setup process. Additionally, existing businesses can receive disaster assistance, debt relief, and licensing fee exemptions.
California cities also had the highest funding scores on our list, making them advantageous options for potential entrepreneurs. In this state, venture capitalists invest a larger amount into startups than other states, and over the past ten years, existing startups grew more than other companies nationwide. Those looking to secure funding can consider starting their business in California, then eventually expanding into other areas across the country.
New Orleans, LA Has the Lowest Score for Entrepreneurs
Entrepreneurs in New Orleans may consider moving to another city if they wish to start a business. The city has one of the lowest funding scores on our list, meaning entrepreneurs would need to dig into their own pockets to start a successful business or find a niche with low operating costs. While the city has lower labor market and economy scores than most on this list, it is more affordable for prospective homeowners.
Methodology
To find out the best U.S. cities for entrepreneurs, the team at RealtyHop ranked America’s largest cities by the following metrics:
Labor Market Score (20 points)
- Unemployment rate from the BLS (4 points)
- Median household income, based on the most recent U.S. Census data (6 points)
- Percentage of the population with a Bachelor’s degree or higher (6 points)
- Percentage growth of population with a Bachelor’s degree or higher in the past 10 years (4 points)
Economy Score (20 points)
- Number of business establishments per 1,000 capita (10 points)
- Percentage growth of the number of business establishments per 1,000 capita since 2020 (10 points)
Funding Score (40 points)
- Yearly average amount of funds invested by VC (20 points)
- Percentage growth of VC funds invested in the past decade (20 points)
Policy Score (20 points)
- Number of Entrepreneurial Development programs available (including loans, tax credits, etc.) (16 points)
- State income tax (4 points)
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