For young entrepreneurs, location can be key. A place that has a bustling business atmosphere — but isn’t too expensive — is best for those looking to successfully launch a new company. Popular entrepreneurial hubs Silicon Valley, Los Angeles and New York are too pricey for many, but other cities are poised to become the next centers of innovation.
To pinpoint these metro areas, NerdWallet scored all 381 in the United States, as defined by the U.S. Census Bureau, on aspects that could be essential to entrepreneurs’ success. We looked at each area’s population of adults aged 25 to 34, percentage of the population with an undergraduate education or higher, per capita dollar amount of U.S. Small Business Administration loans, number of businesses per 100 people, network coverage (so entrepreneurs can get the most out of their cell phone plans), median home value, median income and unemployment rate.
Business is booming in Colorado. Boulder, Fort Collins and the Denver-Aurora-Lakewood area — all within about 65 miles of each other — take up three of the top 10 spots on our list. The networking website Built in Colorado lists 2,160 startups and tech companies in its database. The majority of these firms are privately held, and 769 of them have 10 or fewer employees.
Innovation is moving inland. Only two coastal metros made the list, and cities in Colorado, Minnesota, Utah, North Dakota, Texas and Montana took eight of the top 10 spots. Many of these areas have lower median home prices than their coastal competitors, but offer comparable median income and low unemployment.
Tech companies abound — but they’re not the only growing businesses. If building software isn’t your thing, lots of hip new restaurants and breweries are popping up in our top 10 metros.
Top 10 best metro areas for young entrepreneurs
1. Boulder, Colorado
Boulder is part of Colorado’s tech area, but that’s not the only reason it tops our list. The city has the highest percentage of college-educated residents among our top 10, as well as the most businesses per 100 residents. And at 2.4%, its unemployment rate is second-lowest, trailing only the Fargo, North Dakota, area.
2. Minneapolis-St. Paul-Bloomington, Minnesota
This area’s startup network includes an active tech news site, tech.mn, and hosts Twin Cities Startup Week. The cities benefit from a relatively high concentration of people aged 25 to 34, the second-lowest median home price in our top 10, and a high percentage of college-educated residents. They also boast a strong median SBA loan dollar amount per capita, and the Minnesota SBA issued 1,674 loans in the 12-month period that ended Sept. 30, 2016 — “a record year,” according to the Minneapolis Star-Tribune.
3. Salt Lake City, Utah
Only Austin, Texas, has a higher percentage of young people than Salt Lake City, and the scenic Utah capital performs strongly regarding number of businesses, unemployment and cell coverage. According to the website Visit Salt Lake, 4,300 tech companies have offices in the city, and despite its somewhat restrictive reputation, craft breweries and new restaurants have been on the rise since the state loosened its alcohol laws in 2009.
4. Austin-Round Rock, Texas
The Austin-Round Rock area is home to the University of Texas, and it has the highest concentration of residents aged 25 to 34 in our top 10. Its median SBA loan dollar amount per capita is the highest among our top 10 as well. Austin is also Texas’ capital, and the region is home to 1,752 startups, according to an Austin database. It might have ranked higher, but it has below-average cell phone coverage and a low proportion of businesses to residents relative to the rest of the top 10.
5. Denver-Aurora-Lakewood, Colorado
Denver and Boulder are only 30 miles apart, but Denver scores a little lower than its neighbor in almost every category. Still, the Denver-Aurora-Lakewood area offers a more affordable median home price and a higher concentration of residents aged 25 to 34 than its nearby counterpart.
6. Fort Collins, Colorado
This northern Colorado town has lower unemployment and a lower median home price than the bigger Denver-Aurora-Lakewood area, but it’s kept from a higher ranking by its relatively low percentage of residents aged 25 to 34 and its median income, which is the third-lowest in our top 10.
7. Seattle-Tacoma-Bellevue, Washington
The home of Microsoft and Amazon is still a destination for young entrepreneurs. The Seattle area’s median income trails only that of the San Francisco-Oakland-Hayward portion of California, and its median home price is more than $350,000 lower than the Bay’s. However, it has the highest unemployment rate of our top 10, and in terms of SBA loan dollar amount per capita, you’re a little better off in more expensive San Francisco.
8. San Francisco-Oakland-Hayward, California
The Bay Area might not be the easiest place to settle down on our top 10 — it has the second-highest unemployment rate and the highest median home price by far on the list — but it offsets these faults by having the highest median income and second-highest percentage of college-educated residents among the top 10 metro areas.
9. Fargo, North Dakota-Moorhead, Minnesota
Fargo has the lowest median home price and lowest unemployment rate among the top 10 metros, making it the most affordable area on our list. It’s also the largest city in North Dakota, and it has the resources and a diversifying set of businesses to match. This includes a small, but close-knit, community of startups, as demonstrated by the networking website Emerging Prairie. Its culinary community is active, too — a recent list of new businesses in the area from local publication Fargo Monthly touted four new craft beer bars or breweries, two coffee shops and North Dakota’s first vegan restaurant.
10. Missoula, Montana
This Montana city is the smallest in our top 10, and although it’s the location of the University of Montana, its concentration of 25- to 34-year-olds is only 15%. It also has a relatively low median income, but it has the second-highest number of businesses per resident in our top 10.
Top 25 metro areas: full data
Below are the data for the top 25 metro areas for young entrepreneurs. Scroll down and right to see all data.
|Metro area||Total population||Percentage of population ages 25-34||Small Business Administration loan amount per capita||Number of businesses per 100 residents||Percentage of population 25 years and older with a bachelor's degree or higher level of education||Median income per household||Unemployment rate||Median home price||Cell coverage at or above average?|
|2||Minneapolis-St. Paul-Bloomington, MN-WI||3,524,583||15.6||$196||5.33||26.4||$71,008||3.3||$231,800||Yes|
|3||Salt Lake City, UT||1,170,266||16.3||$202||5.31||21.3||$65,792||2.8||$251,200||Yes|
|4||Austin-Round Rock, TX||2,000,860||17.3||$225||4.69||27.8||$67,195||3.5||$241,100||No|
|6||Fort Collins, CO||333,577||14.3||$150||6.01||27.7||$64,919||2.5||$298,100||Yes|
|8||San Francisco-Oakland-Hayward, CA||4,656,132||16.9||$150||5.34||28.1||$88,518||3.8||$718,400||Yes|
|13||Sioux Falls, SD||252,234||15.4||$93||5.79||23||$59,844||2||$167,900||Yes|
|19||St. Cloud, MN||194,418||13.4||$199||5.44||18.6||$54,157||3.3||$168,100||Yes|
|22||Idaho Falls, ID||139,849||14.5||$182||5.48||18.6||$52,689||3||$165,200||Yes|
|23||Burlington-South Burlington, VT||216,661||13.8||$118||6.22||26.9||$66,807||2.9||$266,800||No|
Daniel Tonkovich is a data analyst at NerdWallet, a personal finance website. Email: [email protected]. Veronica Ramirez is a staff writer at NerdWallet. Email: [email protected]. Twitter: @veraudrey.
To find what NerdWallet considers to be the best metro areas for young entrepreneurs, we looked at the 381 metro areas as designated by the U.S. Census Bureau’s 2015 American Community Survey. We scored and ranked the metros based on the following categories:
- Dollars of SBA loans per capita was used to represent small business credit availability in an area. This was obtained from 2015 SBA data and made up 20% of the score.
- The number of businesses per 100 residents was used to determine the business environment each metro area could offer entrepreneurs. This data was obtained from the census’ 2014 County Business Patterns report and matched to the metro area and made up 15% of the score.
- The percentage of a metro’s population aged 25 to 34 was used to determine how many people within the age range of young entrepreneurs live in these areas. This data was obtained from the census’ 2015 ACS and made up 15% of the score.
- The percentage of the population with a bachelor’s degree or higher was used to judge the extent to which entrepreneurs in each metro area could rely on a well-educated workforce. This data was obtained from the 2015 ACS and made up 15% of the score.
- Median income was used to determine how much a young entrepreneur might expect to make in each metro area. This data was obtained from the 2015 ACS and made up 15% of the score.
- The median home price was used as an indicator of the cost of living in each metro area. This data was obtained from the 2015 ACS and made up 10% of the score.
- The unemployment rate was used to determine the health of the job market in each metro area. We looked at the U.S. Bureau of Labor Statistics’ October 2016 data, and it represents 10% of the score.
- The cell phone coverage in a given area was used to determine the feasibility for a young entrepreneur to maintain client relationships through a mobile device via emailing, texting or calling. If a metro area’s coverage fell below the national average, this subtracted 5% from its score. This data was obtained by OpenSignal on Nov. 22, 2016.