Do you know which state truly leads in the tech startup space? Or how does your state fare when it comes to fostering a thriving tech ecosystem?
A recent study conducted by Merger & Acquisition Advisor, webacquisition.com found that California is the premier state in the US for tech startups, scoring an impressive 88 out of 100. At the other end of the spectrum, Mississippi is ranked as the least conducive state for tech startups, scoring just 35.
This conclusion was drawn based on various parameters, including the number of Bachelor's in Science & Engineering (S&E) degrees among 18-24 year-olds, the percentage of S&E occupants in the workforce, the number of venture capital deals in technology and knowledge sectors, venture capital investments relative to GDP, average business applications over the past 5 years, the business survival rate, tax rates, average weekly wages, and the Quality of Life (QOL) index in each state.
webacquisition.com meticulously evaluated all 50 states in the US using these distinct criteria, assigning a score out of 100 for each criterion. These individual scores were then combined and weighted to generate a final score out of 100. The data for this exhaustive study was sourced from the Tax Foundation, the Bureau of Labor Statistics, the National Center for Science and Engineering Statistics, and the United States Census Bureau.
The Best States to Start a Tech Startup
California
California takes the top spot with its thriving S&E workforce, with 26.94 bachelor's degrees in S&E per 1000 18 - 24-year-olds and 5.90% S&E occupants in the workforce. It boasts a significant venture capital investment in tech (0.40% of GDP) and impressive business applications (437,447) with a high survival rate of 55.20%.
Despite a higher tax rate of 8.80%, the state offers a comfortable average weekly wage of $1,658.50 and a high quality of life index of 137.6, securing its top position with a final score of 88.
New York
New York ranks second with strong representation in S&E education and workforce (31.05 bachelor's degrees in S&E per 1000 18-24-year-olds and 4.40% S&E occupants in the workforce). The state sees a higher percentage of venture capital deals in tech (0.50% of GDP). It has a substantial number of business applications (264,837) with a survival rate of 53.90%.
The state's lower tax rate of 6.50% and an average weekly wage of $1,756.50 contribute to a quality of life index of 134.5, resulting in a final score of 76.13.
Massachusetts
Massachusetts, ranks third with an impressive 38.16 bachelor's degrees in S&E per 1000 18-24 year-olds and 7.10% S&E occupants in the workforce. It has a reasonable venture capital investment in tech (0.40% of GDP). It sees many business applications (65,308) with a survival rate of 55.00%. With an 8.00% tax rate and an average weekly wage of $1,757.00, the state offers a high quality of life index of 149.7, resulting in a final score of 74.8.
Florida
Florida, secures the fourth spot with a relatively lower percentage of S&E graduates (20.57 bachelor's degrees in S&E per 1000 18-24-year-olds) and 3.60% S&E occupants in the workforce. It has a limited venture capital investment in tech (0.10% of GDP). Still, it makes up for it with many business applications (507,669) and a reasonable survival rate of 50.20%.
With a lower tax rate of 5.50% and an average weekly wage of $1,203.50, the state has a quality of life index of 102.8, resulting in a final score of 73.55.
Texas
Texas ranks fifth, with 16.3 bachelor's degrees in S&E per 1000 18-24-year-olds and 4.90% S&E occupants in the workforce. The state's venture capital investment in tech is relatively low (0.10% of GDP), but it sees a considerable number of business applications (392,189) with a survival rate of 51.50%.
With a General Revenue Tax and an average weekly wage of $1,338.75, the state has a quality of life index of 92.5, resulting in a final score of 68.28.
Delaware
Delaware takes the sixth spot, boasting a relatively high number of S&E graduates (31.05 bachelor's degrees in S&E per 1000 18-24-year-olds) and 5.70% S&E occupants in the workforce. It sees a significant venture capital investment in tech (0.70% of GDP) and a decent number of business applications (34,877) with a survival rate of 45.00%.
Despite a higher tax rate of 8.70%, the state offers an average weekly wage of $1,303.00 and a quality of life index of 105.6, resulting in a final score of 66.96.
Colorado
Colorado ranks seventh with 28.82 bachelor's degrees in S&E per 1000 18-24 year-olds and 7.30% S&E occupants in the workforce. The state's venture capital investment in tech is 0.30% of GDP, supporting nearly 100,000 business applications.
With a survival rate of 50.60% and a lower tax rate of 4.40%, the state offers an average weekly wage of $1,427.25 and a quality of life index of 104.6, resulting in a final score of 66.68.
Virginia
Virginia secures the eighth spot with 28.11 bachelor's degrees in S&E per 1000 18-24 year-olds and 7.70% S&E occupants in the workforce. The state's venture capital investment in tech is 0.10% of GDP, supporting over 100,000 business applications. With a survival rate of 52.00% and a 6.00% tax rate, the state offers an average weekly wage of $1,347.75 and a quality of life index of 102.8, resulting in a final score of 62.72.
Maryland
Maryland ranks ninth, excelling in education and S&E workforce, with 32.58 bachelor's degrees in S&E per 1000 18-24-year-olds and 7.80% S&E occupants in the workforce. The state's venture capital investment in tech is 0.20% of GDP, supporting nearly 100,000 business applications.
With a survival rate of 51.10% and a higher tax rate of 8.30%, the state offers an average weekly wage of $1,357.75 and a quality of life index of 124, resulting in a final score of 62.72.
North Carolina
North Carolina takes the tenth spot, with 21.8 bachelor's degrees in S&E per 1000 18-24-year-olds and 5.00% S&E occupants in the workforce. The state's venture capital investment in tech stands at 0.10% of GDP, supporting nearly 135,000 business applications.
With a survival rate of 51.40% and a lower tax rate of 2.50%, the state offers an average weekly wage of $1,202.00 and a quality of life index of 95.7, resulting in a final score of 60.51.
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Mushfiqur Sarker, Co-founder and Merger and Acquisition Advisor at webacquisition.com, Commented that “The top ten states for tech startups in the USA prioritize education and Science and Engineering (S&E) skills. They attract a lot of venture capital for tech and create a supportive startup environment. These states see many business applications and startups that survive, proving their tech ecosystems are thriving.
Some states are known for low taxes, while others provide high wages and good living conditions. These states are vibrant innovation hubs with various factors contributing to their success in the tech startup world.”
The Worst States to Start A Tech Startup
Mississippi: Ranking last, Mississippi has only 15.7 bachelor's degrees in S&E per 1000 18-24-year-olds and a 2.50% S&E workforce. It also lacks in tech venture capital investment. The average weekly wage is $882.50, with a business survival rate of 39.50%, culminating in a final score of 35.
Kansas: At 49th, Kansas boasts 20.42 bachelor's degrees in S&E and a 4.40% S&E workforce. Despite the absence of significant tech venture capital, it offers a weekly wage of $1,089.00 and a 46.90% business survival rate, achieving a score of 45.8.
Nevada: Placing 48th, Nevada has 13.44 bachelor's degrees in S&E and a 2.50% S&E workforce. It has a modest 0.20% tech venture capital relative to GDP and a promising business survival rate of 47.60%. With a weekly wage of $1,160.50, its score is 46.14.
Arkansas: Ranking 47th, Arkansas offers 16.03 bachelor's degrees in S&E and a 3.00% S&E workforce. With a 0.10% GDP in tech venture capital and a 47.50% business survival rate, the state's average wage is $1,026.75, leading to a score of 47.44.
Connecticut: At 46th, Connecticut boasts 26.66 bachelor's degrees in S&E and a 5.20% S&E workforce. It has a modest 0.10% tech venture capital relative to GDP. With a weekly wage of $1,569.25 and a 48.50% survival rate, its score settles at 47.56.
Tennessee: Tennessee ranks 45th, offering 16.7 bachelor's degrees in S&E and hosting a 3.30% S&E workforce. Despite a limited 0.10% GDP in tech venture capital, it enjoys a 51.00% survival rate and an average wage of $1,190.00, resulting in a score of 48.12.
Nebraska: Positioned at 44th, Nebraska provides 22.24 bachelor's degrees in S&E and has a 4.40% S&E workforce. It holds a 0.10% tech venture capital and a 48.70% business survival rate. With an average wage of $1,078.00, its score is 48.33.
Louisiana: Ranking 43rd, Louisiana offers 17.29 bachelor's degrees in S&E and a 2.40% S&E workforce. It has a 0.10% GDP in tech venture capital and a decent 50.50% survival rate. The state's average wage is $1,079.50, scoring 49.52.
Kentucky: Placed 42nd, Kentucky has 16.92 bachelor's degrees in S&E and a 3.20% S&E workforce. With a limited 0.10% GDP in tech venture capital but a higher 52.70% survival rate, its weekly wage is $1,057.00, reaching a score of 50.06.
New Mexico: Standing at 41st, New Mexico provides 15.48 bachelor's degrees in S&E and boasts a 4.70% S&E workforce. Despite a 0.10% GDP in tech venture capital, it has a 49.20% survival rate and an average wage of $1,011.00, leading to a final score of 50.29.
Post courtesy of webacquisition.com
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