The Kauffman Index of Entrepreneurial Activity recently released a study comparing startup activity across states for 2011. They rated the top 10 states as follows.

  1. Arizona (520 out of 100,000 adults): Low business and property taxes combined with a highly educated workforce has made Arizona a favorite for entrepreneurial activity, with small business owners migrating from more expensive states like California. Top industries here include software, semiconductor, clean-tech and renewable energy, and technology firms.
  2. Texas (440 per 100,000): One of Texas’s biggest draws is that there’s no personal or corporate income tax, with minimal regulations. There are also many capital programs available for fledgling startups. Top industries in Texas include health care, biotech and medical device, and a variety of professional and technical services.
  3. California (440 per 100,000): Although the state is faced with a host of economic problems, California’s Silicon Valley continues to be a hub for web and biotech startups. Hollywood’s entertainment industry also contributes to the states entrepreneurial strength.
  4. Colorado (420 per 100,000): Interestingly, a high unemployment rate has spurred a growth of startups in this state, with leaders in their industries who have lost their jobs starting their own firms. Top industries here include IT, manufacturing, and consulting firms.
  5. Alaska (410 per 100,000): Although Alaska is far from cheap when it comes to starting up a business, given its distance from the continental U.S., startups get the benefit of low business taxes and no state income or sales tax. Niche businesses do well here, as do restaurants.
  6. Missouri (400 per 100,000): Missouri has recently experienced a boom due to low taxes, cheap electricity, and a host of business-friendly incentives. Startups are emerging in a variety of industries, including manufacturing, biotech, life sciences, agribusiness, and food processing.
  7. Nevada (390 per 100,000): Nevada’s traditionally low taxes have really attracted small business in recent years, and Nevada has really streamlined it business licensing processes as well. Major industries in this area including technology services providers, logistics, and aerospace and defense companies.
  8. Vermont (390 per 100,000): Vermont is home to a strong capital network and ample state funding for entrepreneurs, as well as a highly educated workforce. Top industries here include biotech, bioscience, environmental engineers, and other tech companies.
  9. Idaho (380 per 100,000): Idaho offers prospective businesses everything from lower electricity costs, to lower living costs, to business tax credits. This has made Idaho a popular place for a variety of innovators and tech firms.
  10. Florida (380 per 100,000): Florida offers reduced regulation and lower business taxes, with the added benefit of no personal income tax. Firms that have been attracted to Florida range from medical device manufactures to robotic device makers, as well as other technology startups.

The Kauffman Index of Entrepreneurial Activity is a leading indicator of new business creation across the United States.


Kavilanz, Parija. “10 Most Entrepreneurial States.” CNN Money. 6/13/12. (6/15/12.)