Tech startups are the small but mighty heroes of the innovation revolution. They create jobs, stimulate the economy and bring bold, often life-changing new ideas and inventions to the fore. Reflecting this rising trend, cities all across America are home to an ever-growing crop of transformative startups — and the next generation of skilled tech talent propelling them forward.
To better understand the U.S. cities driving the digital revolution — and to highlight exemplary patterns within their startup ecosystems that entrepreneurs and civic leaders can learn from to bolster their region’s competitive edge — 1776, the U.S. Chamber of Commerce Foundation, the U.S. Chamber Technology Engagement Center and FreeEnterprise.com developed the Innovation That Matters (ITM) report.
Drawing off of survey data collected from local tech startup founders and public and private sector leaders, the annual extensive research project, now in its third year, ranks 25 American cities’ readiness to capitalize on the shift to the digital economy.
The 413 entrepreneurs and business influencers polled (via an 18-point questionnaire) are working to solve problems in the healthcare, energy, education and smart cities sectors through technology and innovation. The information and feedback they provided centered around six key areas — startup capital, connectivity, culture, density, industry specialization and talent — was used to rank the various metropolitan areas.
“We’re in the midst of a digital revolution has the potential to make winners of some cities and leave others behind,” said J.D. Harrison, senior director of strategic communications at the U.S. Chamber of Commerce. “The cities that embrace this shift to a digital economy and actively support technology startups will be best positioned to unleash the power of high-impact innovation and cultivate vibrant, thriving communities.”
Of the many tech hubs examined, 10 rose to the top as the hottest American cities to launch a tech startup from right now. They are:
Boston, home to a wealth of bleeding-edge health– and education-tech startups (and the world-class universities and hospitals that often feed into them in one way or another), has laid claim to the Number One spot on the ITM report for two consecutive years. The bustling seaside biotech hub led the rankings for its exceptional startup density, which fell far above the report average. This thanks to an exceptionally large tech entrepreneur population and for the city’s prevalence of next-wave technology startups.
2. San Francisco Bay Area
Situated in Silicon Valley’s big backyard by the sea, the San Francisco Bay Area capped the ITM rankings, holding the Number Two spot for a second year in a row. Once again leading for its remarkably high startup density, the Bay Area rose to the top of the list due to its continued eminence in the three following areas: talent, capital and industry specialization. On the whole, the densely populated region boasts an exceptionally large number of well-established and rising tech startups. The early dominance of many widely recognized early innovators has precipitated a surge in seed funding in the area, as well as a particularly robust startup community support system.
One of the most notable upward movers on this latest ITM report, the City of Brotherly Love moved up five places, to 3rd from 8th in overall ranking last year. The city saw marked improvements in startup culture and connectivity, and in availability of skilled tech talent. More specifically, Philadelphia, known to some as “Philicon Alley,” saw a 5.5 percent increase in receptivity to innovative ideas and a 6.6 increase in the business-friendliness of its regional regulatory environment.
4. San Diego
Sunny San Diego, a Southern California tourism hot-spot that attracts approximately 30 million visitors per year, inched up one place to 4th this year from 5th on last year’s ITM report. The seaside city, home to fast-growing tech sectors such as cybersecurity, Big Data analytics, robotics and software development, saw notable increases in startup connectivity and capital, despite significant losses in startup culture and access to skilled tech talent.
Austin, which has become a haven for tech-savvy millennials seeking good-paying job opportunities from the more than 5,500 innovative startups in the area, jumped from 6th to 5th in overall rankings on the ITM report this year. Driving the Texas tech hub’s ascent is its considerable availability of skilled workforce members, as well as a particularly large startup density. The city — increasingly known as “Silicon Hills” and widely recognized for its business-friendly regulatory climate and relatively affordable cost-of-living — is also attractive to young software developers and other technology workers angling to break into large tech firms, such as Google, Facebook, Apple and HomeAway, that have set up shop in the trendy town.
Driven in large part by a surge in financial tech, education tech and health tech startups, Atlanta clinched the “most improved” city designation on this year’s ITM report, rocketing up more than 15 places since last year’s analysis. Georgia’s capital city, home to The Advanced Technology Development Center at Georgia Tech and Microsoft Technology Center, dramatically improved in its rankings mainly due to strong performances in the areas of startup connectivity and culture. Unlike most markets, where connectivity was on the decline over the last year, Atlanta, increasingly known in local techie circles as “Silicon Peach,” saw a 33.3 percent improvement in corporate-to-small-business connections, as well as an 11.5 percent improvement in connections with startup advisors and mentors.
Dallas, the Lone Star State’s fourth most populous metropolitan area, soared upward 12 places on the ITM report this year, claiming the 7th spot from the 19th the year before. Fueling its ascent is a marked improvement in startup connectivity, in which it bumped up 10 places this year. The city, known for its large and diverse pool of skilled workers, also clocked noticeable gains in citizen engagement (which increased by 13.3 percent) and access to startup ecosystem cheerleaders (which jumped by 15.5 percent).
Seattle, increasingly known as “Silicon Canal,” climbed from 11th on the ITM report to 8th this year in the overall rankings. Washington state’s largest metropolis — home to Amazon.com and several other prominent tech firms, with Microsoft headquartered out of nearby Redmond — saw a 7-place improvement in startup density, a 3-place improvement in access to talent and a 1-place improvement in venture capital.
9. New York City
Coming in at 9th in this year’s ITM report, New York City’s technology ecosystem, sometimes called “Silicon Alley,” is home to just about every startup niche imaginable, with notable sectors including education tech, health tech and financial tech playing a big role. Specifically, over the past year, the largest East Coast technology hub saw a 10-place increase in availability of skilled tech talent and a 10-place increase in startup culture.
10. Portland, Ore.
Nicknamed “Silicon Forest” and home to a booming green tech sector, Portland jumped up two spots in the overall ITM report rankings this year to nab the 10th spot. This ascent is mainly due to significant gains in startup density. Additionally, the city saw a two-place improvement in startup culture, as well as a one-place upward jump in availability of skilled talent.