Silicon Cities
Why Dallas Might Be America’s Next Silicon Valley
Free Enterprise Staff | June 30, 2016

Every month, Free Enterprise shines a spotlight on a different Silicon City and highlights one of the many booming metropolitan areas that are becoming America’s newest entrepreneurial hubs.

These cities are home to successful entrepreneurs because they offer support, funding, talent and opportunities. In June, we took a closer look at the city of Dallas, and why it’s become a new haven for small business and entrepreneurialism.

Here’s what we found is helping Dallas rise to the top:

Strong talent pool and thriving startup community

While other Lonestar cities like Austin have long been known as small business hotbeds, the talented pool of workers in Dallas is helping turn this city into another startup capital.

  • Local small businesses benefit from the many Fortune 500 companies based in the Dallas area, which not only boost innovation but also hire talented workers from across the country, creating a diverse pool of highly qualified potential employees from which startups can recruit.
  • A thriving population of foreign-born entrepreneurs are also launching lucrative businesses and boosting innovation in the area. In fact, one out of every 50 high-tech, foreign-born entrepreneurs in the United States lives in the Dallas-Fort Worth area, according to a 2014 study by the Kauffman Foundation. Meanwhile a 2010 report by the American Immigration Council found that a quarter of all Dallas business owners were foreign-born.

Low tax rates, small business support and affordability

It shouldn’t be a surprise to anyone familiar with Dallas that entrepreneurs and private enterprises are relocating to the city from other parts of the country. Texas has one of the lowest tax rates in the country, doesn’t levy an individual income tax on residents, and has an enviable business incentive program.

  • The Dallas-Fortworth area was named the most “business-friendly city” in America by Market Watch in 2014 thanks to its low startup costs. Last year, the city earned the title of “best place to launch a business” because it has fewer regulatory obstacles, such as permit costs and hiring rules, and a lower minimum wage than many other cities. “Here I can get three developers for the price of one in San Francisco,” said Kevin Hart, the Dallas-based founder of a startup called Aireal. “Because it’s so expensive to live and work in those kinds of cities, you have to pay workers more, and that means you have less [funding] left over.”
  • Local businesses also benefit from a generous state incentive program that doles out $19.1 billion for tax abatements, credits, rebates and other business-friendly services.

Supportive community network

A network of supportive entrepreneurs is essential for business development. While investment and talent are key indicators of how well a small business will perform, it’s often local community programs— as well as mentors and consultants—that help entrepreneurs turn their new business into a lasting enterprise.

  • For entrepreneur Jonathan Van, the city’s livability and support was one of the defining features that helped him turn his startup idea into reality. When he moved to Dallas from Austin to launch his real estate company, Motive, he used connections forged in his new city’s supportive startup community to find a location to start the business and partners who helped him work through the company’s early struggles.
  • Since 2009, the city has grown from having one co-working space and two startup-focused events per month to more than 40 co-working spaces and 15 accelerators and incubators. It also now boasts at least three startup-funding events every day to help entrepreneurs find financial assistance. The Dallas-Fort Worth area attracted $104.1 million in venture capital in the first quarter of 2016—up four-fold since from the last quarter of 2015.

What’s Next?

While it’s impossible to predict exactly what the future holds for Dallas—or any other municipality in the U.S.— it’s clear that the city is on the right path for future success thanks to a relentless focus on technology and globalization.

“You can accomplish whatever you want if you have the right amount of hustle, and because Dallas is cheaper than a lot of other startup cities, with less competition, you can hustle your way to success faster and quicker here,” said local startup cofounder Kevin Hart. “It’s only a matter of time before the city is top.”