13 Best Cities In The US for Tech Startups

Starting a business is an essential decision in life. Once you are a startup owner, you can no longer depend on the security of the monthly paycheck and the health insurance and pension fund offered by your employer. You need to raise capital, market your product or business idea, and attract clients and investors.

The success of a startup depends on the niche and industry you choose.

Some niches are over-saturated, others are not mature enough. The tech industry is a somehow safer bet – if we can talk about safety in the ever-changing landscape of entrepreneurship.

However, even if you have a brilliant and innovative idea, which has the potential to revolutionize the industry, you have to be located in the right area where you are most likely to find an angel investor, a business partner with the sound financial backing and the other ingredients needed for business success, such as an active market, workforce and the potential to grow.

What Makes Some Cities More Attractive for Tech Startups?

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Every city has a specific business culture. For instance, we think of Hollywood, and we think of the movie industry.

We think of New York, and we think of Wall Street and financial giants. The business culture is not something that changes overnight, so you should not be the one “breaking the ice” in a new industry – not when your financial future and the security of your family are at stake.

Six key factors make a city attractive for industry. No matter how flexible and adaptable it may seem, the tech industry is not different from others.

Factors Entrepreneurs Need To Consider To Start A Business In A New City

A tech startup, like a sapling, needs to be planted in the right environment to thrive.

Thus, the six factors which determine the degree of attractiveness of a city for tech startups are:

1. Culture

Beyond the business culture, a city needs to be open to welcoming newcomers and facilitating their integration into the socio-economic environment. Its local regulations for new businesses need to be pervasive enough for someone without too much prior experience or large capital available to meet them.

2. Capital

How much money circulates in the city? Are there business hubs, incubators for the startup, angel investors, and venture capital sources? Without a constant balance between startups and potential investors, a new business will not thrive.

3. Density

Will a new business be a lone wolf or a sheep crammed in a too-tight pen? Too little and too high a density of startups does not represent a propitious environment for a new tech startup. The golden mean is always preferable: enough thriving startups to make the city attractive, but with enough room for new ones.

4. Human resources

A successful startup will not be a startup forever. Soon it will grow into a company that needs talented and professional employees.

Will your startup find them in your city of choice?

Are there tech-oriented colleges and universities, research facilities, and labs to provide you with the talent pool you need?

5. Industry Specialization

Apart from capital and workforce, are there facilities, vendors, and suppliers that your startup will likely need? It is not feasible to open a tech startup in one place and have all the logistics for mass production in another city or another state.

6. Connectivity

Is the city well connected, a transportation hub where you can always count on a constant flow of people and goods? Is the city thriving as a social forum where entrepreneurs have places to meet and network? You will never make it alone as a startup owner, so this aspect is highly significant.

Based on the criteria above, these are the top 5 cities in the US where your tech startup is most likely to thrive:

5 Best Cities In The US for Tech Startups

1. Boston, MA

A landmark in the United States history (everybody heard of the Boston Tea Party), Boston has grown into a vibrant metropolis where tech startups can thrive. The city has an annual GDP of $363 billion – the sixth-largest in the US and the 12th in the world. Boston is already home to some of the most prestigious tech giants in the world, such as:

  • AMD
  • Intel Corporation
  • HP
  • Cisco Systems

However, there continues to be plenty of room for new tech startups. Entrepreneurs are encouraged to open a tech business here by access to many venture capital funds and the presence of many prestigious tech-oriented universities and research hubs.

Boston is where you can find graduates from Harvard University, the Massachusetts Institute of Technology, and Boston University.

Boston was also ranked by Milken Institute, an independent economic think tank, as the top life sciences cluster in the US. This is the city that receives the highest annual funding from the National Institutes of Health.

Global Financial Centres Index ranked Boston as the 9th most competitive financial center on the globe.

Business events and networking opportunities are available in the three main convention centers: the Hynes Convention Center, Seaport World Trade Center, and Boston Convention and Exhibition Center.

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2. San Francisco Bay Area, CA

This area is also known as the “Hollywood of Technology,” and it is not an exaggeration.

Home to Google, Apple, Symantec, Oracle, and NASA’s Ames Research Center, the Bay Area is the place on the West Coast where you should open a tech startup if you want to maximize its success chances.

The area is thriving with financial and business opportunities.

The annual GDP of the San Francisco Bay area is a staggering $781 billion – the 5th in the entire US.

Apart from tech giants, this region has the second-largest concentration of Fortune 500 companies in the country, topped only by the New York metropolitan area.

Regarding human resources, the Bay Area is generous. Close to Stanford University and the University of California at Berkeley, this is where your startup can find some of the best prepared and most talented technology-oriented employees.

The downside to the Bay Area is the very high cost of living.

This is the barrier that prevents many entrepreneurs from joining the Hollywood of Technology.

3. Philadelphia, PA

We can say that Philadelphia was the startup of the United States. The 21st century has grown into a thriving city for tech startups, and statistical data prove this.

Comcast, the tech giant headquartered in Philadelphia, received 4th place in the CB Insights ranking of the most active corporate-startup investors in the US.

Comcast already has invested in 105 early-stage businesses.

The local administration is also actively encouraging the entrepreneurial spirit: Mayor Jim Kenney supports the startup culture by funneling resources through various programs.

One of these is StartUp PHL, created by the collaboration between the Department of Commerce of Philadelphia and its public-private economic development company. The program supports entrepreneurs not just with funding but also with mentorship.

4. San Diego, CA

Do not let Silicon Valley dazzle your eyes – San Diego is a tech startup star in its rights.

In 2014 Forbes magazine designated San Diego as the best city in the US to launch a startup.

The coming years have not given the lie to this prediction. Currently, San Diego boasts some global tech giants, such as:

  • LG Electronics
  • Nokia
  • Kyocera International
  • Qualcomm
  • Websense

Apart from strictly tech businesses, the University of California at San Diego and various research institutes and labs have transformed the city into a vital biotechnology hub.

With over 400 specialized companies and the 7th largest NIH funding in the country.

5. Austin, TX

In the heart of Texas, Austin is not only known for its excellent barbecues but also its appetite for new technologies.

Home to the South by Southwest (SXSW) annual tech event and the University of Texas at Austin has some of the most robust and advanced flight computer programming and technology-related programs.

Austin is a top contender among the best cities in the US to open a tech startup.

The local entrepreneurial culture is firm, and newcomers have lots of opportunities to find funding and mentorship here.

Simultaneously, the low taxes and affordable cost of living are extra bonuses for entrepreneurs who need to relocate to open their tech startup here.

8 Other Best Cities To Start A Business

  1. Denver
  2. Seattle
  3. Portland, OR
  4. Dallas, TX
  5. New York City
  6. Chicago
  7. Las Vegas
  8. San Jose, CA

What are your thoughts on the best cities for startups? Which city, according to you, is the best place to start a business?

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SEO and Content writer, translator, dreamer. These are some of the words which describe Silvia. She believes in the power of words - both for good and for evil. She also believes that we can all choose to use words in a positive manner, to share information, ideas, feelings, and truth. There is nothing more rewarding than to be the instrument through which knowledge is shared among other people. From this point of view, she considers herself in a privileged position of trust, which she strives never to betray.