Colorado is incubating fast-growth businesses at a rate few other states can beat.

With 156 firms on this year's Inc. 5000--a list of the fastest-growing private companies in the U.S.--Colorado is outpaced by stronger showings from states including California and New York, which have 711 and 300 companies respectively. However, when you look at the number of Inc. 5000 companies on the list per million residents, the Centennial State really shines.

Colorado claims 27 Inc. 5000 companies per million residents--nine more companies per capita than in California and 12 more than in New York.

Denver, Boulder, and to an increasing degree Colorado Springs have largely helped fuel that growth. Denver boasts 50 companies on this year's list, while Boulder and Colorado Springs have 13 and 11 Inc. 5000 companies respectively.

The cost of living is lower in Colorado than in more prominent entrepreneurial hubs. The median list price per square foot for homes in Colorado is $263. The median price of homes currently listed is $427,300, according to real estate database Zillow. By contrast, the median list price per square foot for homes in San Francisco is $1,081, and the median price of homes currently listed there is $1.3 million. Rental prices and office-space cost assessments skewed similarly in favor of Colorado. A WalletHub study from earlier this year ranking 100 cities by business costs, including labor and office space, placed Denver at No. 59, while New York came in at No. 88 and San Francisco was dead last at No. 100.

The greater affordability has helped founders like Raphael Crawford-Marks attract first-rate employees. The entrepreneur began shifting his company Bonusly--an employee rewards software maker--to Boulder from New York City by moving the tech team there in 2015. By 2016, the company was hiring across all departments in Boulder, and he made the move himself in 2017.

"People in their prime working age are really looking for a quality of life," adds Crawford-Marks, whose company notched No. 482 on this year's Inc. 5000. "Boulder's getting more expensive, but it's still cheaper than New York or San Francisco."

The lifestyle in Colorado--with ample opportunities for hiking, mountain biking, and horseback riding--is also high on the state's list of desirable features, says Ivan Lopez, general manager of Techstars' Americas West division. "As an entrepreneur, you could be sitting in the Western Slope of rural Colorado, and that's where you want to be. There's no reason to move to Seattle or New York or Silicon Valley."

As Colorado improves its broadband capacity, those rarified sights will truly win out, says Erik Mitisek, the president of commercial insurance data company Highwing and a former chief innovation officer for the state of Colorado. In April of last year, Colorado passed a law that would re-route millions in annual landline subsidies toward improving high-speed internet access in rural areas. Prior to being elected last year, Governor Jared Polis set a goal to improve broadband coverage in rural parts of the state from 83 percent in October 2018 to 95 percent by June 2020, in spite of the challenges of laying down fiber amid the state's differing elevations and waterways.

"As [broadband] becomes more ubiquitous, you'll have more people [who are] more able to stay connected to the modern economy," says Mitisek.

Of course, Colorado isn't the only state with a higher-than-expected concentration of fast-growth companies. Roll over the following chart for more surprises.

Oct 22, 2019