Best (And Worst) States For Entrepreneurship And Innovation

Entrepreneurs starting a solution provider business should consider states with thriving technology sectors and access to venture capital.

Entrepreneurial Spirit

IT startups, solution providers included, are more likely to thrive and grow in states with entrepreneurial, innovative environments. It’s why so much of the U.S. IT industry is clustered in certain locations like Silicon Valley, Boston and Austin, Texas.

The Best States analysis includes criteria in entrepreneurship and innovation, helping pinpoint the geographies where startups have a better track record of success and where young solution providers can benefit from an innovative technology culture, as well as specific advantages such as access to venture capital.

Criteria include the number of technology establishments in a state, tech industry employment, and a state’s technology sector as a percentage of its total gross state product. The number of patents issued within a state and the amount of venture capital invested as a share of gross state product were key data points.

The Best States analysis also incorporated the results of a number of other rankings including FitSmallBusiness.com’s Best Place to Start a Business startup activity rank, WalletHub’s Most and Least Innovative States, and CNBC America’s Top States for Business 2019 technology and innovation rank.

Best States No. 10: Oregon

Tech Business Establishments: 7,003 (Rank No. 22)

Tech Industry Employment: 164,809 (Rank No. 23)

Tech Sector Percent of Total Gross State Product: 12.4 percent (Rank No. 7)

FitSmallBusiness Startup Activity (No. 15)

WalletHub Innovation Environment (No. 8)

CNBC Technology and Innovation (No. 12)

Best States No. 9: Arizona

Tech Business Establishments: 8,561 (Rank No. 18)

Tech Industry Employment: 241,672 (Rank No. 18)

Tech Sector Percent of Total Gross State Product: 10.5 percent (Rank No. 10)

FitSmallBusiness Startup Activity (No. 7)

WalletHub Innovation Environment (No. 10)

CNBC Technology and Innovation (No. 23)

Best States No. 8: Minnesota

Tech Business Establishments: 9,506 (Rank No. 17)

Tech Industry Employment: 250,991 (Rank No. 17)

Tech Sector Percent of Total Gross State Product: 9.3 percent (Rank No. 15)

FitSmallBusiness Startup Activity (No. 29)

WalletHub Innovation Environment (No. 16)

CNBC Technology and Innovation (No. 7)

Best States No. 7: New York

Tech Business Establishments: 24,471 (Rank No. 5)

Tech Industry Employment: 663,295 (Rank No. 3)

Tech Sector Percent of Total Gross State Product: 8.1 Percent (Rank No. 18)

FitSmallBusiness Startup Activity (No. 12)

WalletHub Innovation Environment (No. 19)

CNBC Technology and Innovation (No. 4)

Best States No. 6: Maryland

Tech Business Establishments: 14,840 (Rank No. 14)

Tech Industry Employment: 288,996 (Rank No. 16)

Tech Sector Percent of Total Gross State Product: 11.7 Percent (Rank No. 8)

FitSmallBusiness Startup Activity (No. 34)

WalletHub Innovation Environment (No. 7)

CNBC Technology and Innovation (No. 5)

Best States No. 5: Texas

Tech Business Establishments: 37,713 (Rank No. 2)

Tech Industry Employment: 982,988 (Rank No. 2)

Tech Sector Percent of Total Gross State Product: 8.7 Percent (Rank No. 17)

FitSmallBusiness Startup Activity (No. 7)

WalletHub Innovation Environment (No. 14)

CNBC Technology and Innovation (No. 10)

Best States No. 4: Washington

Tech Business Establishments: 14,105 (Rank No. 15)

Tech Industry Employment: 377,809 (Rank No. 11)

Tech Sector Percent of Total Gross State Product: 20.1 Percent (Rank No. 1)

FitSmallBusiness Startup Activity (No. 31)

WalletHub Innovation Environment (No. 3)

CNBC Technology and Innovation (No. 2)

Best States No. 3: Massachusetts

Tech Business Establishments: 16,617 (Rank No. 9)

Tech Industry Employment: 428,788 (Rank No. 8)

Tech Sector Percent of Total Gross State Product: 17.3 Percent (Rank No. 3)

FitSmallBusiness Startup Activity (No. 25)

WalletHub Innovation Environment (No. 1)

CNBC Technology and Innovation (No. 3)

Best States No. 2: Colorado

Tech Business Establishments: 16,563 (Rank No. 10)

Tech Industry Employment: 292,902 (Rank No. 15)

Tech Sector Percent of Total Gross State Product: 14.5 Percent (Rank No. 4)

FitSmallBusiness Startup Activity (No. 13)

WalletHub Innovation Environment (No. 4)

CNBC Technology and Innovation (No. 7)

Best States No. 1: California

Tech Business Establishments: 51,356 (Rank No. 1)

Tech Industry Employment: 1,782,499 (Rank No. 1)

Tech Sector Percent of Total Gross State Product: 18.9 Percent (Rank No. 2)

FitSmallBusiness Startup Activity (No. 5)

WalletHub Innovation Environment (No. 2)

CNBC Technology and Innovation (No. 1)

Worst States No. 41: Maine

Tech Business Establishments: 2,803 (Rank No. 40)

Tech Industry Employment: 35,817 (Rank No. 40)

Tech Sector Percent of Total Gross State Product: 5.0 Percent (Rank No. 36)

FitSmallBusiness Startup Activity: (No. 25)

WalletHub Innovation Environment (No. 48)

CNBC Technology and Innovation (No. 35)

Worst States No. 42: Iowa

Tech Business Establishments: 4,346 (Rank No. 32)

Tech Industry Employment: 92,036 (Rank No. 30)

Tech Sector Percent of Total Gross State Product: 5.9 Percent (Rank No. 33)

FitSmallBusiness Startup Activity (No. 48)

WalletHub Innovation Environment (No. 46)

CNBC Technology and Innovation (No. 26)

Worst States No. 43: Hawaii

Tech Business Establishments: 2,110 (Rank No. 43)

Tech Industry Employment: 31,537 (Rank No. 43)

Tech Sector Percent of Total Gross State Product: 3.9 Percent (Rank No. 44)

FitSmallBusiness Startup Activity (No. 20)

WalletHub Innovation Environment (No. 44)

CNBC Technology and Innovation (No. 40)

Worst States No. 44: Kentucky

Tech Business Establishments: 5,863 (Rank No. 28)

Tech Industry Employment: 99,374 (Rank No. 28)

Tech Sector Percent of Total Gross State Product: 4.1 Percent (Rank No. 43)

FitSmallBusiness Startup Activity (No. 37)

WalletHub Innovation Environment (No. 42)

CNBC Technology and Innovation (No. 36)

Worst States No. 45: Alaska

Tech Business Establishments: 929 (Rank No. 50)

Tech Industry Employment: 19,247 (Rank No. 49)

Tech Sector Percent of Total Gross State Product: 4.5% (Rank No. 39)

FitSmallBusiness Startup Activity (No. 3)

WalletHub Innovation Environment (No. 47)

CNBC Technology and Innovation (No. 41)

Worst States No. 46: Louisiana

Tech Business Establishments: 5,058 (Rank No. 29)

Tech Industry Employment: 83,599 (Rank No. 32)

Tech Sector Percent of Total Gross State Product: 3.6 Percent (Rank No. 48)

FitSmallBusiness Startup Activity (No. 31)

WalletHub Innovation Environment (No. 49)

CNBC Technology and Innovation (No. 42)

Worst States No. 47: South Dakota

Tech Business Establishments: 1,359 (Rank No. 47)

Tech Industry Employment: 21,930 (Rank No. 48)

Tech Sector Percent of Total Gross State Product: 4.5 Percent (Rank No. 39)

FitSmallBusiness Startup Activity (No. 20)

WalletHub Innovation Environment (No. 40)

CNBC Technology and Innovation (No. 47)

Worst States No. 48: Arkansas

Tech Business Establishments: 3,298 (Rank No. 35)

Tech Industry Employment: 60,332 (Rank No. 37)

Tech Sector Percent of Total Gross State Product: 3.8 Percent (Rank No. 45)

FitSmallBusiness Startup Activity (No. 25)

WalletHub Innovation Environment (No. 45)

CNBC Technology and Innovation (No. 44)

Worst States No. 49: Mississippi

Tech Business Establishments: 3,133 (Rank No. 38)

Tech Industry Employment: 46,813 (Rank No. 39)

Tech Sector Percent of Total Gross State Product: 3.7 Percent (Rank No. 46)

FitSmallBusiness Startup Activity (No. 11)

WalletHub Innovation Environment (No. 50)

CNBC Technology and Innovation (No. 48)

Worst States No. 50: West Virginia

Tech Business Establishments: 2,089 (Rank No. 45)

Tech Industry Employment: 31,473 (Rank No. 44)

Tech Sector Percent of Total Gross State Product: 3.5 Percent (Rank No. 49)

FitSmallBusiness Startup Activity (No. 44)

WalletHub Innovation Environment (No. 51)

CNBC Technology and Innovation (No. 50)