SURGE CITIES

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Surge Cities

The 50 Best U.S. Cities for Starting a Business in 2020

What any business--and any city--can learn from the best places for startups in the U.S.

We have the key to the city--or 50 cities, to be exact. For the 2020 Surge Cities index, Inc. and innovation policy company Startup Genome analyzed troves of data on seven essential indicators--such as early-stage funding and job creation--to determine the 50 best areas for startup growth. In the following dispatches, you'll find a road map for turning forgotten ZIP codes into boomtowns--or simply for answering the age-old question: Where should you go next? From Charleston to Chattanooga, the answers may surprise you.

Austin

Leading the nation in job creation and high-growth company density--and delish BBQ.

No. 3 Population GrowthNo. 27 Net Business CreationNo. 4 Early-Stage Funding Deals
Austin’s population and job gains are staggering--thanks largely to the high-growth companies that made the city tops on Inc.'s per capita list. The Texas capital used to lag in startup funding--now, it's fourth in early-stage deals and has begun minting unicorns. In October, the energy-jobs platform RigUp raised $300 million in a round led by Andreessen Horowitz at a $1.9 billion valuation. Consumer products companies like Yeti Coolers and jeweler Kendra Scott have blown up, and so has the food and beverage scene. Siete Family Foods, a maker of healthy Mexican-food items, raised $90 million this past February and then proceeded to triple its nationwide distribution to some 13,000 stores. “Austin is one of the few markets that is able to support a full range of kinds of startups--like Silicon Valley or New York,” says Joshua Baer, the founder of Capital Factory, the city’s dominant startup incubator. “It's because we have a diverse set of strengths in our background.” He points to homegrown successes like Dell, Indeed, and Whole Foods, whose alums have started their own businesses in related fields. --Tom Foster

Salt Lake City

It’s tops for adventure seekers--both the outdoor and indoor variety.

No. 1 High-Growth Company Density No. 1 Job Creation No. 3 Population Growth
Yes, the scenery is stunning, but so are Salt Lake's bona fides. In 2018, area cloud software maker Domo raised $193 million in its public offering, while survey software maker Qualtrics sold to SAP for $8 billion. These exits and IPOs have inspired a slew of startups--including communications software company Weave, which raised $70 million at a $970 million valuation in October, and Divvy, an expense and budgeting platform, which raised $200 million Series C funding earlier this year. Meanwhile, even as wages are increasing, Salt Lake City housing remains more affordable than that of other major tech hubs such as San Francisco and Seattle. “The active, business-friendly culture is what draws people here,” says David Wright, co-founder and CEO of Pattern, a Lehi-based adtech company that booked $211 million in revenue in 2018 and landed at No. 404 on the 2019 Inc. 5000. The "tight-knit community” is what keeps them here, he adds. --Brit Morse

Durham

Big tobacco cedes to big money in this emerging Southeast startup hub.

No. 3 High-Growth Company Density No. 8 Net Business Creation No. 10 Job Creation
Downtown Durham was an eyesore after its tobacco factories closed in the 1980s. Today, the North Carolina hub has been rebuilt, with shops, offices, and co-working spaces revitalizing the entire city. Tech companies flock here in part for the low rent: at $26.87 per square foot of commercial space, it’s a fraction of what you’ll find in places like New York City or San Francisco. Durham has one of the highest rates of entrepreneurship per capita in the country, and while a chunk of the city’s funding comes from big banks that tend to be risk-averse, the area has seen an uptick in access to early-stage capital thanks to younger firms like Bull City Ventures and Triangle Angel Partners. Co-working space American Underground, which offers mentorship and networking programs, recently opened a fourth Durham location and houses more than 250 startups in total. The city’s startups span a wide range of industries, but there are a large number of software and and science startups, such as therapeutics upstart Ribometrix, which recently earned a $20 million investment, and biotech firm Baebies, which has secured $19 million to date. Just down the road from Durham is Raleigh, and the two cities feed off each other’s highly talented, hyper-educated workforces, which include a high number of Duke, UNC-Chapel Hill, and NC State graduates. All three universities have strong entrepreneurship programs and investment funds through which alumni can invest in students’ businesses. --Kevin Ryan

Denver

It’s like San Francisco and Palo Alto--but with cows.

No. 2 Rate of Entrepreneurship No. 4 High-Growth Company density No. 8 Wage Growth
Young, cool, and yet more affordable than Silicon Valley, the Mile High City rose four spots in the Surge Cities ranking this year--securing the No. 2 spot for percentage of adults who are entrepreneurs. “I think the secret is out that this Western cow town is an epicenter for innovation,” says Eric Mitisek, co-founder of Denver Startup Week and the Commons on Champa, a downtown hub for entrepreneurs. While early-stage funding is easier to come by than growth capital, companies are still managing to scale. Denver ranks fourth for high-growth company density. Major exits are common. Ping Identity, a maker of identity-management software, went public at a $1.2 billion valuation in September. Denver’s startup scene also enjoys a symbiotic relationship with nearby Boulder, where seed-accelerator Techstars was founded. “A decade ago, we were separated by 36 miles of distance and [were] very different cities,” Mitisek says. “Today, it’s the same as San Francisco and Palo Alto.” And, of course, there’s the legal weed. Since legal cannabis sales began in 2014, Colorado’s cannabis industry has generated over $6 billion, reports CNBC. --Sophie Downes

Boise

You can buy four houses in Boise for the price of one in San Francisco.

No. 2 Population Growth No. 3 Job Creation No. 3 Net Business Creation
Boise’s rise won’t surprise many in California's tony suburbs, as transplants searching for cheaper rent and less-crowded entrepreneurial markets have descended on the Idaho capital. Exhibit A: Boise educational play products company Lovevery. Founders Jessica Rolph and Roderick Morris have recently been able to lure talent away from Seattle, Oakland, and San Francisco. “Boise is cool now,” says Rolph, a longtime city resident. “Four years ago, we didn’t have the fun coffee shops and great places to eat.” What else didn’t they have? Money. But that's changing too. So far this year, Boise startups have raised $70.2 million in venture capital, up $8 million from 2015’s full-year tally, according to PitchBook. Lovevery also recently closed on a $20 million investment led by VC firms like Maveron and GV, bringing its grand tally to $32 million. Area founders credit Boise’s surge to a five-year effort by local business leaders to increase access to funding and talent. The grassroots initiative started after locals saw other smaller cities gaining recognition as entrepreneurial havens. --Emily Canal

San Francisco

Opportunity and optimism still reign in this world-famous startup hub.

No. 1 Early-Stage Funding Deals No. 2 Wage Growth No. 8 High-Growth Company Density
Despite rising office space costs--up 9 percent in 2019 over 2018, according to one report--and some of the highest residential rents in the country, San Francisco remains a breeding ground for startups. Companies like Pandora have found better deals and easier commutes in nearby Oakland, where fintech startup Square recently moved into the 356,000-square-foot Uptown Station building. Hayward, also a short drive or BART ride from the city, offers large offices at more reasonable prices, and has been home to biotech companies like Illumina for years. Saam Motamedi, a general partner at Greylock Partners--a VC with Bay Area portfolio companies including Airbnb and Medium--sees the density of “founder-level” commitment as a key draw in the area, with veterans of companies like Apple, Google, and others starting their own companies. “So much talent comes out of the last generation,” he says. “The energy and optimism here continues to stun to me.” --Matt Haber

Charleston

In this Southern hotspot, funding takes a back seat to founding.

No. 1 Net Business Creation No. 6 High-Growth Company Density No. 10 Job Creation
While tourism, the military, and medicine have dominated in Charleston for decades, a growing tech-startup contingent has found champions in the alumni of the city's early successful startups. These include HR software maker BenefitFocus, which went public in 2013, and Automated Trading Desk, a high-frequency trading pioneer that was acquired by Citigroup in 2007 for $680 million. New-wave Charleston tech companies tend to excel in enterprise software geared toward nonprofits, the real estate industry, human resources, and government. Meanwhile, a cadre of new packaged-goods brands--including Cannonborough Craft Soda and the New Primal beef jerky--is building on the South Carolina city’s strong food culture. While startup funding has lagged--Charleston ranks first for net business creation, yet 32nd for early-stage funding deals--“that tide is starting to turn,” says Patrick Bryant, a co-founder of the Harbor Entrepreneur Center co-working space. Increasingly, Bryant notes, VCs from Atlanta, Charlotte, and New York City are starting to pay attention. --Tom Foster

San Diego

Come for brand names. Stay for the startup scene--and the beach.

No. 7 Rate of Entrepreneurship No. 7 High-Growth Company Density No. 7 Early-Stage Funding Deals
In 2018, much of San Diego's near-record $2.5 billion in venture capital funding went to life sciences and biotech businesses. These industries are still the main attraction in this beach town, but San Diego’s nascent tech scene is picking up, thanks largely to two new area venture firms--Blueprint Equity and Torrent Ventures--and local tech giant Qualcomm’s corporate venture fund, which is putting $100 million into A.I. companies. While the area’s universities generate a lot of smart, young talent, midlevel managers skilled at helping fledgling ventures get to the next level are in short supply. That could change with the arrival of outposts from Apple, Amazon, and Walmart Labs. “For a long time, Qualcomm has been the big brand name here, but when you get the Apples and Amazons [opening offices] in town, people are going to chase the brand names,” says Neal Bloom, a local entrepreneur who runs Fresh Brewed Tech, a site about San Diego’s tech community. The hope is that while new talent may come to the city for the bigger brand names, they’ll eventually stay for the startup scene--and the beach. --Lindsay Blakely

Phoenix

Low costs and low regulations help this desert flower blossom.

No. 2 Net Business Creation No. 7 Population Growth No. 9 Job Creation
Like a lot of the places on this year’s list, Phoenix is benefitting from the sky-high cost of living and running a business in pricier locales like New York City and San Francisco. Between 2017 and 2018, Sun City added more than 25,000 new residents to become the fastest-growing city in America, according to recent U.S. Census data. Phoenix is also second in the country for business creation, in part because of new startup-friendly laws and a talent pool drawn from nearby Arizona State University. Area entrepreneurs like the founders of mattress maker Tuft & Needle and meal-delivery service Freshly regularly dip into the school’s pool of graduates. “Geography doesn’t have a monopoly on great ideas” or people, says Brandon Clarke, co-founder of Startup AZ Foundation. “We see a lot of serial entrepreneurs here by choice. They’re at their third or fourth time at bat.” Phoenix has all that, plus two-hour direct flights to San Francisco. --Matt Haber

Miami

Its A-list startup scene just keeps heating up.

No. 1 Rate of Entrepreneurship No. 19 High-Growth Company Density No. 22 Net Business Creation
Gloria Estefan and Madonna have both lived and run businesses here. However the startup scene is also A list. ParkJockey, a parking management platform founded in 2013 by Ari Ojalvo and Umut Tekin landed a reported $800 million in funding from SoftBank and others in 2018. That brought the company’s valuation to more than $1 billion. So far this year, local startups have raised $808 million in funding, which is $601 million behind 2018's total for the year, according to PitchBook. But high-profile exits—including HR and payroll software firm Ultimate Software selling to a private equity group for $11 billion this year—bode well for the area. Locals credit the city’s growth to its high density of immigrants, who mostly hail from Cuba and other countries within Latin America. Miami also has the second-largest percentage of foreign-born entrepreneurs in the U.S., beating cities like New York and Los Angeles, according to Inc.’s Entrepreneurship Index, which tracks the health of the U.S. startup economy. “In Miami, you get the sense that nothing is impossible,” says Maxeme Tuchman, co-founder of Caribu, an app that lets users draw or read with children when they’re apart. “If you can build it, you can do it.” –Emily Canal

Nashville

The city’s startup ecosystem trails its robust music scene--but only slightly.

No. 5 Job Creation No. 6 Net Business Creation No. 16 Population Growth
Sure, Nashville has honky tonks--it’s called Music City for a reason. But its health care industry is the star in the startup world, with more than 900 companies in play. Just two examples: Health data company Stratasan secured $26 million in a July round, and dental care firm SmileDirect’s September IPO raised $1.3 billion. Tennessee's capital also boasts a strong fashion industry, with more than 150 brands, and countless artists and creatives. Startups get support from Launch Tennessee, a statewide public-private entrepreneurial resource, and local nonprofit Nashville Entrepreneur Center. The latter recently collaborated with the mayor’s office to launch the Navigation program, which connects founders with the programs and funds best suited to their businesses. “Even though we're growing really quickly, we’re still a very collaborative community,” says Nashville Entrepreneur Center COO John Murdock. “Everyone here wants to see you succeed.” --Kevin Ryan

Seattle

It’s brimming with potential--if you can get past the 800-pound gorilla.

No. 5 Wage Growth No. 6 Early-Stage Funding Deals No. 14 Job Creation
If Microsoft was once the 800-pound gorilla in Seattle, surely that title now belongs to Amazon--it occupies more office space in Seattle than any other company in any other major U.S. city, according to a 2017 analysis conducted by real-estate data firm CoStar. Google, Facebook, and Apple have also been growing their presence in town, which has contributed to Seattle's strong wage growth and job creation. (Cue the deluge of Millennial techies: Seattle remains at the top of the list for net migration of people between the ages of 20 and 34.) The Emerald City ranks dead last for net business creation, but companies that do get off the ground are often able to secure early-stage funding. Options include a few influential local firms, including the 24-year-old Madrona Venture Group, as well as a new crop of early-stage funds, such as Flying Fish Partners, and, increasingly, out-of-state investors. What kinds of startups get investors’ attention in Seattle? Cloud computing has been big for more than a decade, and Matt McIlwain, managing director at Madrona, points to applied artificial intelligence and machine learning as the next big growth area. --Sophie Downes

San Jose

Outsized home prices dovetail with generously sized startup checks.

No. 2 Early-Stage Funding Deals No. 12 Wage Growth No. 17 High-Growth Company Density
The South Bay is full of talent (thank you, Stanford!), and it offers cozy proximity to Google, Facebook, Apple, Cisco, and the like. With Sand Hill Road just around the corner, San Joseans know there's always a chance to run into big time VCs. However, with median home prices just shy of seven figures, the area’s high cost of living is a major barrier to would-be founders and those looking to expand here. In May 2019, The Mercury News of San Jose reported a worrying 42 percent increase in homelessness in the region. These factors are likely what’s preventing San Jose from becoming a top-tier Surge City, However, George Damouny, a partner at Plug and Play Ventures, which helped launch PayPal, Dropbox, LendingClub, and others, continues to see promise in these environs. “Silicon Valley is still a really open place to start a business,” Damouny says. “You can knock on the door of a CEO and get a response.” --Matt Haber

Boston

The talent pipeline is chock full and every bit virtuous.

No. 3 Early-Stage Funding Deals No. 14 High-Growth Company Density No. 17 Rate of Entrepreneurship
There’s no shortage of brainpower in this New England hub. Much of Boston’s startup activity emerges from top-tier universities like Harvard and MIT. According to Jeff Bussgang, co-founder and general partner at early-stage venture firm Flybridge Capital Partners and a senior lecturer at Harvard Business School, the schools breed promising startups that draw investors to the city, who in turn attract entrepreneurial young people, who know they can find funding for their ideas in Boston. “There’s a phenomenal positive feedback loop with intellectual capital,” Bussgang says. There’s also no shortage of funding: Boston founders closed 203 early-stage deals in the 12 months ending in May 2019. And the city crowned a unicorn in the last year. Ginkgo Bioworks, a synthetic-biology startup founded in 2009 by MIT grad students, raised a $290 million Series E round in September at a valuation of more than $4 billion; that makes it the most valuable venture-backed company in Boston and the second-most valuable venture-backed biotech startup in the country, according to PitchBook. --Sophie Downes

Portland

It’s a beacon for food nerds--and fintech founders.

No. 9 Net Business Creation No. 14 Rate of Entrepeneurship No. 18 Early-Stage Funding Deals
If you associate Portland, Oregon with organic food, craft beer, and coffee, it’s for good reason: These businesses contribute to an unparalleled food scene, and what Portland incubator owner Rick Turoczy calls an ecosystem of “accidental entrepreneurship.” “A lot of folks here will cook one dish really well, and people tell them they should start a food cart. Or they're a developer who builds a solution for themselves, and then somebody else tells them they'd pay them for that solution," he says. "It’s a very grassroots kind of entrepreneurial town." Just about everything startup in Portland is expanding rapidly--particularly in the fintech sector, as new companies spring up and established firms like Expensify build Portland outposts. The apparel industry is flourishing locally, too; Nike, Adidas, Columbia, and Under Armour all have headquarters here, making it easier for fledgling founders to access potential mentors and talent. Funding doesn’t flow as freely as in other startup hubs, but the city’s capital climate is improving. Oregon startups--including vet e-commerce platform Vetsource and enterprise software maker Puppet--raised $603 million in venture funding 2018. This October, vacation rental company Vacasa closed a $319 million round, becoming the city’s second unicorn. --Kevin Ryan

Raleigh

Software engineers earn 15 percent less a year than the U.S. average.

No. 4 Wage Growth No. 6 Population Growth No. 16 Early-Stage Funding Deals
The population in North Carolina’s capital is downright surging, rising 20 percent in the past decade. This growth is partially due to the Research Triangle’s first-class universities, which include Raleigh’s NC State and nearby Duke and UNC-Chapel Hill. Graduates are not only staying and working, they’re also starting up companies--and many are lassoing seed-stage funding. Customer analytics software maker Pendo, co-founded by NC State alum Erik Troan, achieved unicorn status in October, raising $100 million at a $1 billion valuation. The city recently announced plans to develop 300-acre Dorothea Dix Park, which will feature athletic fields, botanical gardens, and a business incubator. “Raleigh is pouring its efforts and resources into developing the city,” says Kevin Barry, founder of HVAC filter subscription startup Second Nature. “It’s becoming a place where people want to live, work, and play.” Despite all the growth, the city remains affordable: At $88,076, a software engineer will cost you 15 percent less than the national average. --Kevin Ryan

Los Angeles

Seekers of fame and fortune still come here--just for different reasons.

No. 4 Early-Stage Funding Deals No. 10 Rate of Entrepreneurship No. 22 Net Business Creation
While the number of funding deals in Los Angeles and Orange County fell slightly in 2018, according to PricewaterhouseCooper’s and CB Insight’s MoneyTree Report, the area saw its biggest year in total funding since 2000, as investors poured more than $6 billion into area startups last year. According to local VC firm Amplify, the top 10 VC deals in L.A. in 2018 surpassed $2.5 billion collectively, which is double what that city saw in 2017. Further bolstering the LA startup ecosystem, tech hardware company Ring sold to Amazon in 2018 for more than $1 billion, and faux burger company Beyond Meat had a beyond successful IPO in May 2019. “It used to be if you wanted to start a fintech company, you had to go to New York,” says Fika Ventures VC Eva Ho. “We have SaaS, fintech, transportation, logistics--now there’s no sector [L.A.] doesn’t cover substantially.” --Lindsay Blakely

Madison

It remains a massive healthcare center—but way less sleepy.

No. 7 in Wage Growth No. 10 Early-Stage Funding Deals No. 25 High-Growth Company Density
This newcomer to the list of startup-friendly cities has seen a rapid turn from sleepy health care and biotech center to one of the fastest growing centers for early-stage funding deals per capita in the country. The success of large firms such as health care software giant Epic Systems, which now employs nearly 10,000 people, has led to an explosion of adjacent startups in recent years, including Redox, a health tech company launched by three former Epic employees in 2014 that now has $50 million in venture funding. New local offices by Google and Zendesk, which employ hundreds, have made this the seventh-fastest growing Surge City by wage growth. While Wisconsin's capital may finally be bucking its reputation for brain drain--recent University of Wisconsin graduates who used to move away seem less inclined to do so these days--the Surge City effect may be limited by Madison’s boundaries: Wisconsin continues to rank toward the bottom in startup job creation and opportunity share, according to the Kauffman Foundation. --Christine Lagorio-Chafkin

Orlando

The house that Mickey Mouse built is getting some unlikely visitors.

No. 4 Population Growth No. 8 Job Creation No. 16 Net Business Creation
The low cost of living and ample nonstop flights to major hubs--hello, Disney World--are appealing. There's also an effort to strengthen Florida's early-stage startups with newly launched accelerator programs such as VentureScaleUp and co-working communities like GuideWell Innovation Center, a 92,000-square-foot space designed for health and medical startups. “Looking back at our DNA and roots, we are the region that put a man on the moon,” says Sheena Fowler, the vice president of innovation at the Orlando Economic Partnership. “Orlando is built on the backs of those who have tackled the impossible.” In addition to the city’s transformation on the ground, its reputation received a boost from Steve Case’s Rise of the Rest road trip. The pitch competition kicked off its eighth annual tour in Orlando, and local company AireHealth, a maker of portable nebulizers, took home the $100,000 investment prize. --Emily Canal

Tampa

Bold-faced names are paying handsomely to see this city succeed.

No. 9 High-Growth Company Density No. 12 Net Business Creation No. 14 Population Growth
Tampa’s startup ecosystem owes a lot to a couple of billionaires. In 2017, Tampa Bay Lightning owner Jeff Vinik announced plans--alongside Bill Gates’s Cascade Investment--to build Water Street Tampa, a 56-acre, $3.5 billion development project in downtown Tampa. Entrepreneurs are also benefiting from accelerator Tampa Bay Wave and Vinik’s new innovation hub, Embarc Collective. After participating in Tampa Bay Wave’s TechDiversity accelerator program, regulatory compliance startup JustProtect relocated from New York City this year. A homegrown field of startups is also taking root. “In the last one to two years, this region has become more of a tight-knit community,” says Brian Kornfeld, the president of Synapse, a local Florida nonprofit that hosts annual innovation summits. “We used to be disconnected and compartmentalized. Now it’s starting to feel like a village.” Also contributing to Tampa’s thriving ecosystem are high-profile exits for companies like cloud-computing firm Tribridge and pharmacy benefits management company myMatrixx, which were both acquired in 2017. --Emily Canal

Colorado Springs

The small-town vibe helps founders scale this wide-open space.

No. 5 Wage Growth No. 11 Population Growth No. 11 Rate of Entrepreneurship
This vast community just 60 miles south of Colorado's capital is becoming a beacon for Millennials--16,000 moved there in 2017 alone--as well as other high-skilled workers, who are all drawn to the area's mountain views and affordable home prices. Colorado Springs ranks as the 12th-most-educated metro area in the country, according to Wallethub, and thanks to its five military institutions, the labor pool is technically inclined, too. In the past couple of years, incubators such as Exponential Impact and Catalyst Campus, which specifically nurtures startups with a defense or aerospace focus, have helped connect local entrepreneurs with talent, mentors, and funding opportunities. To wit, Cherwell Software, an enterprise software company, pulled in a $172 million investment in 2018. This year, SaaS company Quantum Metric raised $25 million and FoodMaven--an online marketplace for surplus food that started out of Colorado College--picked up more than $25 million in funding. “Colorado Springs still operates like a small town,” says Exponential Impact’s CEO Hannah Parsons. “There aren’t many connections we can’t help entrepreneurs make here.” --Lindsay Blakely

Charlotte

Fintech startups don’t need giant banks nearby to succeed, but it helps.

No. 8 Rate of Entrepreneurship No. 12 Population Growth No. 15 High-Growth Company Density
The scene of America’s first gold rush has found a home with a different kind of prospector: fintech entrepreneurs. With major banks including Bank of America headquartered in the major North Carolina city and strong local universities proffering entrepreneurial types along with well-educated workers, Charlotte has seen a boom in fintech startups. It has even created a couple of unicorns, including bill-payments processor AvidXchange and analytics software maker Tresata. The Charlotte Regional Business Alliance, a business advocacy and networking organization, counts 47 area fintech companies at press time. And the Charlotte region tallied a 45 percent jump in new tech firms since 2013--versus 29 percent in the U.S. overall. Support from local government, universities, and business groups like the nonprofit Carolina Fintech Hub have helped cultivate the boomlet too. The Fintech Hub recently offered $10,000 for the best idea to help improve upward mobility in Charlotte, a stat line where the Queen City does not rank well. --Steve Goldberg

Palm Bay

The engineering might in Florida’s panhandle is VC catnip.

No. 7 Job Creation No. 14 Wage Growth No. 15 Rate of Entrepreneurship
What Palm Bay’s metro area lacks in size--tallying about 600,000 residents--it makes up for in engineering might. Defense contractors L3Harris, Northrop Grumman, and Lockheed Martin have a presence in this Floridian hub just south east of Orlando. NASA too. Though its startup culture is still fledgling, those who do launch in Palm Bay--and find funding--are cut from the same cloth as the area’s giants. That’s evidenced by companies like Tomahawk Robotics, which was co-founded in 2018 by a former robotics engineer from Harris. In December, it lassoed $2.4 million in seed funding, led by Mosley Venture Partners in Atlanta. “We haven’t had our first big exit yet,” says Bud Deffebach, co-founder of Melbourne-based incubator and co-working space Groundswell. “But I feel pretty confident that’ll happen within the next couple years.” An angel investor with VC experience, Deffebach is doing his part to encourage that change--working through Groundswell to educate local tech talent on marketing and sales and to connect promising startups with VC funds elsewhere in the Southeast. Atlanta, he says, has a nearby entrepreneurial model that Palm Bay hopes to emulate. --Cameron Albert-Deitch

Atlanta

It’s the premier startup hot spot for black founders in the South.

No. 5 High-Growth Company Density No. 20 Early-Stage Funding Deals No. 24 Job Creation
Giants like Delta and Coca-Cola are headquartered here, but this big-company town has a sizeable coterie of fast-growing businesses, too. Much of the credit for this surge goes to the Atlanta Tech Village, a co-working and community hub that launched in 2012. It has since inspired a sprawling network of incubators and co-working spaces. Atlanta’s growing reputation as a national startup hotspot is also introducing more funding into the ecosystem, especially for black and female founders. Accounting software maker LeaseQuery, run by Nigerian-American founder George Azih, landed $40 million Series A funding from Goldman Sachs in November, while Jasmine Crowe’s surplus food management platform Goodr has inked big-name clients like the NFL and Hartsfield-Jackson Atlanta International Airport. “The momentum has sped up,” says Jewel Burks Solomon, a co-founder of Collab, an early-stage startup investment firm for black founders. “It’s like a snowball--building, building, building. Ultimately, it’s going toward this vision being realized of Atlanta being the best place [in the U.S.] for black entrepreneurs.” --Cameron Albert-Deitch

Bridgeport

It’s a genuine startup haven, say the 19,200 companies founded since January.

No. 3 Rate of Entrepreneurship No. 10 Wage Growth No. 13 Early-Stage Funding Deals
There’s a reason Connecticut’s Gold Coast conjures images of hedge fund guys driving Teslas. They’re there, of course. But so too is a burgeoning fintech and media startup scene, empowered by well-resourced support networks and services. The city owes much to the skilled labor that’s reliably pumped in by the 186 colleges and universities within a 50-mile radius. In the first half of this year, 19,200 businesses were created--more than double those registered in the city in the first half of 2018, according to the Connecticut secretary of state’s office. This marks the fourth straight year of growth, and one that coincides with entrepreneur-turned-governor Ned Lamont’s first term in office. What’s more, the region ranks 13th in the nation in number of early-stage funding deals, thanks in part to a legacy of wealth in the city's environs and its history of hedge funds and finance firms. Plus, with New York City just an hour’s train ride away, the location is prime for pitching VCs there. --Christine Lagorio-Chafkin

Sacramento

This state capital is trading its 10-gallon hat for a 244-acre innovation hub.

No. 10 Job Creation No. 18 Net Business Creation No. 20 Rate of Entrepreneurship
Sacramento is shedding its staid image--thanks in part to massive development projects like the 244-acre Railyards district, which will feature 10,000 housing units, shops, parks, and offices as well, as a stadium for the city’s new pro soccer team. Easy access to the Bay Area--just 90 miles away--adds to the area’s appeal. While salaries are smaller than those found in and around Silicon Valley, residents of California's capital and its suburbs can afford a higher standard of living for less money. The local talent pool is drawn from STEM-friendly UC Davis, where several programs serve as incubators and a new technology campus, dubbed Aggie Square, is slated to break ground in the next few years. Growing jobs, easier commutes, a hot culinary scene, and a collegial business environment are attracting new residents. Strong support from the city and the influence derived from being the state's seat of government don't hurt. “I think it’s fantastic that we’re a government town,” says Louis Stewart, the city's chief innovation officer. “It’s actually part of our pitch to businesses.” --Matt Haber

Bakersfield

The famed agricultural hub is getting a name for growing entrepreneurs, too.

No. 3 Job Creation No. 4 Net Business Creation No. 11 Rate of Entrepreneurship
More and more entrepreneurs are setting up shop in this California farm town, famous for its bountiful natural resources. Yet founders struggle with scaling their companies, putting Bakersfield in last place for high-growth company density. A promising sign: In 2018, the city welcomed its first angel investing firm, Kern Venture Group, which is bound to benefit the city’s burgeoning Latinx entrepreneur community. The latest data from the U.S. Census Bureau shows that the number of local Latinx businesses grew 36 percent between 2007 and 2012--more than those founded by entrepreneurs from any other demographic. Just one example: Latinx entrepreneur Frances Cueto, co-founder of Lino’s Mexican Cuisine, is in the middle of opening her fourth restaurant. There’s more opportunity for businesses to stand out in Bakersfield than in more prominent startup hubs, says Anna Smith, co-founder of local real estate company Sage Equities, which is currently helping revitalize downtown Bakersfield. “In a lot of ways, it is easier than opening a business in a big city." --Guadalupe Gonzalez

Washington

The nation’s capital has plenty of appeal--if you can stand the commute.

No. 2 High-Growth Company Density No. 11 Early-Stage Funding Deals No. 35 Rate of Entrepreneurship
Amazon’s much-hyped HQ2 announcement in late 2018 is only part of the massive wave of growth D.C is surfing right now. Virginia Tech is plotting a $1 billion innovation campus in nearby Alexandria, while other area schools, including the University of Maryland, University of Virginia, and George Mason University, are hatching similar plans. “We’re only going to see more projects, partnerships, and other ways the company impacts the region,” says Jeff Reid, a professor and founding director of the Georgetown Entrepreneurship Initiative. That could lead to more intense commute times for weary road warriors, who already contend with some of the worst congestion in the nation. But a $15 billion investment in improving the area’s metro should help. For those interested in skipping the traffic jam, living and working in D.C. is also an option, as housing prices are more modest when compared with other major U.S. cites like N.Y.C. and S.F. The area is also jam-packed with startup resources. D.C.’s Halcyon Incubator, for one, serves as the incumbent hotspot for area founders. --Emily Canal

Dallas

This Texas jobs powerhouse is just warming up.

No. 12 Population GrowthNo. 12 High-Growth Company DensityNo. 24 Job Creation
The job creation machine that is Dallas-Fort Worth is hard to beat. Last year, the DFW metroplex added some 70,000 jobs--more than either Austin or Houston. American Airlines and AT&T are headquartered here, while Uber is looking to make Dallas its largest hub outside of San Francisco. The ride-share giant just signed up to build a high rise that’s expected to host 3,000 employees. While Dallas still can’t compete with Austin for top live music or Houston for great food--and while it’s nowhere near a beach---this Texas hotspot is loaded with high art and high culture. These lifstyle draws combine with low business and housing costs to make Dallas attractive to entrepreneurs and to accelerators, such as Health Wildcatters. At the same time, big companies including Texas Instruments, have venture capital arms to fund and partner with their startup neighbors. --Bill Saporito

Lakeland

Population trends make this Central Florida hub boomtown U.S.A.

No. 1 Population GrowthNo. 2 Job CreationNo. 10 Net Business Creation
Long overshadowed by Orlando and Tampa, this Central Florida hub is now receiving some well-deserved time in the sun. In the last year, Lakeland has received a major influx of new residents; and now ranks first for population growth in. The mild climate is only part of the reason. While housing prices have largely recovered, the median home price remains just slightly lower than what it was before the housing crisis sideswiped the state. The business community is proactive, too. Fourteen years ago, members of the Lakeland Economic Development Center, a business-district improvement organization, visited other startup communities, and gathered ideas for how to improve their own community. That gave rise to the area’s new affordable co-working space Catapult, which launched in 2013 and is already outgrowing its current location. A new 38,000-square-foot space, complete with commissary kitchen and maker space, is set to open early next year. Additionally, in the next several months, the city will also get a new food hall called the Joinery and a gathering spot for food trucks and craft beer called the Yard on Mass. --Emily Canal

Spokane

This bastion of blue-collar grit is getting a lift from its tony neighbors.

No. 6 Rate of EntrepeneurshipNo. 14 Population Growth No. 19 Early-Stage Funding Deals
Logistics and manufacturing companies thrive in Spokane, Washington where costs are low and the Pacific Northwest’s largest cities are all a few hours’ drive away. It’s also still remarkably affordable, which tends to serve as an added inducement for transplants. “What you hear from a lot of people is that places like Seattle and San Francisco are so cool, but the cost of that cool is so much more than they can afford,” says Luke Baumgarten, founder of co-working space Fellow Coworking. “So they come to Spokane, with its gritty blue-collar vibe and the proximity to nature. They quickly realize it’s a pretty awesome place.” And business is undoubtedly a fixture: Gonzaga University, located in the city’s center, offers one of the top-rated business programs in the country, and medical schools at the University of Washington and Washington State help fuel health care and biotech startups. As a sign of what’s coming: Spokane added more construction jobs in the past year than all but two U.S. cities, and its rate of entrepreneurship also reached new heights. --Kevin Ryan

Ogden

Ski in the winter, hike in the summer, and start up year round.

No. 10 High-Growth Company DensityNo. 16 Population GrowthNo. 22 Job Creation
The one-time railroad town--which mob boss Al Capone once deemed “too wild” to visit, according to local folklore--is now a bustling tech hub for aerospace and advance manufacturing industries, which are aided in part by the Utahan city's proximity to the Hill Air Force Base. The city also stands out for having one of the top 10 largest concentrations of fast-growing businesses per capita. That includes Funded Today, a company that offers marketing and consulting services for crowdfunding campaigns. Co-founded by Zach Smith and Thomas Alvord in 2014, Funded Today landed on the Inc. 5000 fastest-growing companies in the U.S. after ramping up its three-year revenue growth by 8,798 percent to $11.7 million in 2017. Manufacturing companies like Barnes Aerospace, which makes components for turbine engines, and Enve Composites, a producer of carbon fiber cycling wheels, offer high-tech workplaces amid the colorful backdrop of the Wasatch Mountains. --Guadalupe Gonzalez

Greenville

This former textile capital nurtured nearly 1,300 new businesses last year.

No. 5 Net Business CreationNo. 25 Rate of EntrepreneurshipNo. 25 Population Growth
The former textile capital of the world has moved beyond its apparel-industry history with a burgeoning tech ecosystem. The area’s intro into the “fourth industrial revolution,” as Greenville’s Chamber of Commerce president Carlos Phillips explains, started just over a decade ago. Rather than try to persuade some large employer to set up in the South Carolina city, as the town has managed in the past with both BMW and Michelin, the business community had a better plan: “We needed to build that company from within,” says Philips. Smart long-term planning by public and private organizations, such as the creation of an entrepreneur-networking organization called Next, has yielded sweeping results. Greenville ranked fifth in the nation in net business creation in the past year. The area is especially strong in Medtech, with prominent startups in the space including Zylö Therapeutics, Netalytics, and ChartSpan. Nearby Clemson University offers a strong pipeline of talent, and out-of-town VC firms from such as Atlanta’s BIP Capital have started deal hunting in town. --Tom Foster

North Port

The startup scene is one part low costs and two parts go-getter.

No. 7 Population GrowthNo. 10 Job CreationNo. 13 Rate of Entrepreneurship
In this Gulf Coast town, mom-and-pop shops cater to beachgoers while tech startups stay inland--thanks to a recent influx of gigabit-speed internet availability. The cherries on top are relatively low housing and business costs, including a top marginal corporate income tax rate of 5.5 percent. This has all led to a surge in transplants from the rest of the country, many of whom quickly commit to starting and growing small businesses in the area. Adam Petrilli is a New York City transplant who moved his reputation-management startup NetReputation.com to Sarasota, Florida in 2014. He says entrepreneurship is simply in the air there. “The community just has some kind of aura where they know it’s possible,” says Petrilli, whose business was No. 208 on this year’s Inc. 5000 list of fastest-growing companies in the U.S. “Even the server at the beach club always has these ideas and just wants to be an entrepreneur. There’s just a very problem solving-type attitude.” --Cameron Albert-Deitch

Riverside

The local university became the beating heart of this startup community.

No. 14 Net Business CreationNo. 16 Job CreationNo. 16 Wage Growth
Priced-out Angelenos have been moving in droves to Riverside and San Bernardino, where real estate costs are roughly half of those in L.A.’s pricey market. In March, there were reportedly 100,000 housing units in the works. The Inland Empire is also aiming to carve out a niche for itself in the startup world. In October, the University of California Riverside opened a 3,000-square-foot Wet Lab Incubator specially outfitted to house 15 startups in the life sciences, agriculture, biotechnology, and medical industries. Access to capital in the area is limited, but money is still available to those who know where to look. In 2017, UC Riverside helped create a $10 million seed capital fund called the Highlander Venture Fund. The following year, its Entrepreneurial Proof of Concept Center and Small Business Development Center launched to offer access to capital, as well as mentorship and training. The school also helps manage Excite, a local technology accelerator in downtown Riverside. “Our region is a test bed to actually build stuff and see if it works,” says Scott Brovsky, director of the program, “and we’re working to find entrepreneurs who can scale globally.” --Brit Morse

Chattanooga

Gig City: where approachability meets opportunity.

No. 13 High-Growth Company DensityNo. 23 Wage GrowthNo. 25 Net Business Creation
In 2010, Chattanooga became the first U.S. city to offer inexpensive gigabit-speed internet to all of its residents. Since then, the Tennessean city's economy has flourished, entrepreneurial activity has spiked, and resources for startups have proliferated. These include the Company Lab, a nonprofit accelerator that hosts Chattanooga’s annual Startup Week, and the INCubator, a massive 127,000-square-foot complex currently housing 55 startups, including 3-D printed builder Branch Technology, which has $9.5 million in funding. Today, it ranks 25th in the country for net business creation. Entrepreneurs are also drawn to the area because of its big city culture and small town vibe, says Alexis Willis, director of small business and entrepreneurship at the Chattanooga Area Chamber of Commerce. “Hearing about Chattanooga's [high-speed] internet may have brought them here, but then they’re like, ‘I want to move my whole family here’ and they end up sticking around,” she says. --Cameron Albert-Deitch

Jacksonville

Startups in other cities are circling around this North Florida hot spot.

No. 7 Population GrowthNo. 16 Rate of EntrepreneurshipNo. 24 Net Business Creation
The rate of entrepreneurship keeps climbing in the Florida hub, thanks to recent ecosystem investments like the University of North Florida’s 13,000-square-foot innovation center, which opened in February. Meanwhile, the Mayo Clinic’s new Life Sciences Incubator, designed for biotech entrepreneurs, and early-stage VC firm PS27 are also creating new opportunities for local firms. Now startups in other cities are taking notice, says Jim Stallings, CEO of PS27, who has seen an increase in the number of out-of-state attendees at the incubator's annual entrepreneurship conference. “They're realizing the talent that's available in Jacksonville, as well as the quality of life and low cost of living," says Stallings. Taylor Harkey is co-founder of Adjective & Co., a Jacksonville branding and advertising agency that has been featured on Inc.’s Best Workplaces list three years in a row. He affirms the area's appeal to out-of-state talent, as four members of its 20-person staff hail from outside of Florida. What's more, he adds, the influx of talent has helped shore up local businesses like breweries and restaurants, which have added to the city's appeal. --Emily Canal

Las Vegas

Generous incentives and low taxes stack the deck in favor of entrepreneurs.

No. 5 Population GrowthNo. 5 Job CreationNo. 12 Net Business Creation
With no state or local income taxes, Las Vegas doubles down on entrepreneurs with incentives like a system to help startups protect intellectual property and the six-year-old, state run Battle Born Venture Program, which invests in local enterprises. Not surprisingly, many local firms focus on game design and hospitality. Plenty of VC-backed startups are also planting their flags in the desert: Pigeonly, a Y Combinator graduate that helps connect people with loved ones in prison, has raised $5.1 million. Banjo, the much hyped A.I. platform that tracks social media, traffic, and other digital data in real time, has more than $100 million in funding from the likes of SoftBank, BlueRun Ventures, and VTF Capital. Las Vegas has also been drawing talent from more traditional startup hubs because of its affordability. The Las Vegas suburb of Henderson has seen its population grow by 20 percent in the last decade, with more than half of the new residents coming from California. --Matt Haber

Oklahoma City

This city asked its NBA team for an assist on startup investment.

No. 5 Rate of EntrepreneurshipNo. 23 Wage GrowthNo. 27 Job Creation
Anchored by two major research institutes--the Oklahoma Medical Research Foundation and the Oklahoma University Health Sciences Center--this state capital is a hotbed for life sciences businesses. Though funding is a pain point for many local entrepreneurs--Oklahoma startups have only raised about $6 million, according to data compiled by PricewaterhouseCoopers and CB Insights--city and business leaders are getting creative in their efforts to help founders secure cash. In 2018, the NBA's Oklahoma City Thunder teamed up with local accelerator StitchCrew to launch Thunder Launchpad, a 12-week initiative offering mentorship, support, and other resources to participating startups, as well as a chance to pitch to investors. Local nonprofit i2E, a storied member of the startup ecosystem, is also a bright note in the region, investing roughly $61 million across 169 companies to date. --Guadalupe Gonzalez

Minneapolis

In the Twin Cities’ version of fostering startups, corporate VCs dominate.

No. 15 Net Business CreationNo. 24 Early-Stage Funding DealsNo. 27 High-Growth Company Density
Consumer-product giants Target, Cargill, and Land O’Lakes are not only major Twin Cities employers; they’re also active startup boosters. In 2017, Land O’Lakes launched its own dairy industry accelerator. The following year, Cargill partnered with Techstars and Eco-lab to launch a food accelerator dubbed Farm to Fork, and Target also operates an accelerator for retail startups. Women-focused endeavors--including co-working space the Coven, and the Sofia Fund, which invests in high-tech women-run businesses--have also helped prop up the area’s entrepreneurs. Even as the city's population growth has stagnated, the five-year business survival rate in Minneapolis is 54.4 percent--the third highest in the nation, according to Bureau of Labor Statistics. "There’s less risk tolerance here than on the coasts," said Alex West Steinman, co-founder and CEO of the Coven. "I think some of that comes from wanting to build something that’s going to be around a long time rather than what takes off like rocket fuel." --Christine Lagorio-Chafkin

Oxnard

The Silicon Beach party is moving upstate.

No. 3 Wage GrowthNo. 22 Rate of EntrepreneurshipNo. 26 Net Business Creation
Drawing from a wealth of scientific talent at UCLA, Caltech, and Cal Poly Pomona, Oxnard, California and its environs are a growing haven for biotech companies. Last year, Westlake Village BioPartners, an area VC firm, announced a new $320 million fund to invest in local early-stage human therapeutics companies. “There’s all this pent-up grassroots demand for biotech startups,” says Sean Harper, Westlake's managing director and co-founder. According to Harper, Oxnard is on its way to replicating more established hubs like Boston, San Francisco, or San Diego. “It’s the same sort of energy level, the same sort of ecosystem.” There are some differences, of course. The war for talent outside L.A. is far more subdued. And the region has different inducements for would-be founders: Oxnard hosts the port of Hueneme, a leading point of entry for auto and fresh produce imports--making the area well positioned for agriculture tech and logistics startups. Oxnard is also getting spillover from L.A., whose northern suburbs are just an hour's drive away. --Brit Morse

Columbia

The state capital’s startup scene lags its South Carolina brethren--for now.

No. 6 Net Business CreationNo. 20 Wage GrowthNo. 34 Population Growth
Home to the University of South Carolina, this state capital is a small city big on brainpower and creativity. While Columbia's startup activity lags behind that of its Surge City neighbors, Charleston and Greenville, programs such as the USC/Columbia Technology Incubator are ramping up growth in the area’s nascent tech scene. “The progress we’ve made has been tremendous,” says Caroline Crowder, the incubator’s program director. Much of Columbia's startup activity is software-focused, with strong suits in telemedicine, insurance, and real estate. Two of the most exciting young companies in town--Land Intelligence and Resimplifi--aim to shake up commercial real estate. Columbia's startup community is still in its early days: While the city ranks sixth on our list for net business creation, it’s 43rd for the number of high-growth companies and 47th for job creation. --Tom Foster

Cape Coral

If you want young talent to stay put, buy into their company building.

No. 7 Population GrowthNo. 10 Net Business CreationNo. 20 Job Creation
The Great Recession rocked this coastal community, but the area’s economy is finally starting to turn--thanks, in part, to favorable population trends, as well as a growing enthusiasm for starting up. Promising companies founded out of Florida Gulf Coast University’s four-year-old student incubator have generated $10.2 million in combined revenue. The university also launched an entrepreneurship program in 2017, which currently hosts 500 students. Sandra Kauanui, the entrepreneur-turned-professor who runs both programs, has noticed increasing interest in social entrepreneurship. Among other social ventures, there’s youBelong, a social app for people with special needs created in 2017 by FGCU student John Ciocca. Last year, the company won a national Edison Award, which recognizes excellence in new product and service launches. All that signals progress, says Kauanui. “One of the biggest problems we had for many years was that our young people didn’t stay here,” she says. “Now, we’ve got the feeder to create the East Coast Silicon Valley.” --Cameron Albert-Deitch

Columbus

Early-stage funding remains a bright spot in Ohio’s capital city.

No. 15 Early-Stage Funding DealsNo. 20 Wage GrowthNo. 28 Population Growth
Success stories like digital auto insurer Root Insurance, now valued at more than $3.6 billion, are resonating with investors. Columbus, Ohio-area startups captured more than $494 million in venture capital in the first three quarters of 2019, thus surpassing last year’s total funding amount by over $100 million. Ohio’s biggest hospitality investing firm, Columbus-based RockBridge, has $2.3 billion under management and about 250 hotel assets worth more than $7.8 billion. It’s also one of the leading voices behind the development of Columbus’s North Market neighborhood. The project expands the famous food and vendor market to make room for more merchants. It’ll also add a residential area and independent hotel, plus 90,000 square feet of prime office space. While the cost of living is lower here--with median home prices hitting in the low six figures, for instance--jobs remain hard to come by. Columbus dropped 17 spots from last year’s Surge Cities list, in part because it ranked lower in job creation. --Guadalupe Gonzalez

Houston

This Texas energy hub is finding growth in top doctors and space travel.

No. 23 Job CreationNo. 20 Wage GrowthNo. 25 Population Growth
Houston wants to be known as the Third Coast, a place that is both a business and cultural hub. A place where people want to be. And this city, one of the most diverse in the country, is well on its way. While it still dominates in energy, the city is also nourishing a growing prowess in biotech, health care, and aerospace. Its relationship with the Texas Medical Center--an agglomeration of some 40 medical institutions, including the MD Anderson Cancer Center--and NASA, which is just down the road in Galveston, make this Texas hub an alluring sandbox for medical and commercial space startups. “There’s such diversity and a confluence of talent and opportunity in one place,” says Roger Griesmeyer, a partner at Hunton Andrews Kurth, a law firm that specializes in life science startups. “Houston is selling a lifestyle brand with all the resources to bear.” That, he says, includes low regulations and taxes, as well as “a highly educated populace, great weather, and a bunch of money.” --Bill Saporito

Springfield

In Pioneer Valley, founders are made, not imported.

No. 14 Wage GrowthNo. 22 Early-Stage Funding DealsNo. 28 Net Business Creation
This Pioneer Valley city benefits from its proximity to the Berthiaume Center for Entrepreneurship at UMass Amherst, which serves as an incubator of startup talent. Founders in the Massachusetts town can develop further with Valley Venture Mentors, a grant fund and mentorship organization, and innovation center TechSpring. The latter organization focuses primarily on later-stage startups in health care, while the former has helped more than 300 startups since its founding in 2011. “We don’t have a bias toward high-tech. We have a bias toward the people who live here," says Valley Venture Mentors CEO Kristin Luetz. “[People here] see anyone as a potential high-growth entrepreneur.” Area founders can access local funds sponsored by the Valley’s largest companies--most notably, Springfield-based insurance giant MassMutual. If that doesn’t prove fruitful, it’s a two-hour drive east to Boston's VCs. --Cameron Albert-Deitch

Tulsa

The city's growth plans include paying people to move there.

No. 1 Wage GrowthNo. 19 Rate of EntrepreneurshipNo. 36 High-Growth Company Density
Tulsa may be the second largest city in Oklahoma, but it’s first in the nation for wage growth. That can be good for attracting top talent and bad for cash-constrained firms, but entrepreneurs here are taking it all in stride. Community support has been most important for the city's founders. Tulsa’s Regional Chamber, technical-training school Tulsa Tech, and various charitable institutions came together to launch the nonprofit co-working space 36 Degrees North. Area entrepreneurs get an additional boost from local incubator the Forge as well as early-stage investment and business advisory firm i2E. A strong talent pipeline comes from local schools like the University of Tulsa and Oklahoma State University, which both offer entrepreneurship courses. The newly implemented Tulsa Remote program is also attracting new faces to the area. The initiative, which launched in late 2018, shells out $10,000 in grants to talent moving to Tulsa. The program brought 100 remote workers to the city in its first year--the maximum number who could join--and plans on expanding to 250 participants in 2020. --Emily Canal

Des Moines

A single tax incentive instantly buoyed Des Moines’s startups.

No. 16 Population GrowthNo. 16 High-Growth Company DensityNo. 25 Rate of Entrepreneurship
While advantageous tax policies don’t always beget economic growth, they've certainly helped in Des Moines. In 2015, Iowa boosted its Angel Investor Tax Credit from 20 percent to 25 percent and made it refundable. That’s led to real money for area startups. “I’ve had conversations with local investors who say [this tax credit] has motivated them to be more active,” says Gregory Bailey, founder and CEO of marketing software firm Denim, which raised $1 million from angel investors after the rule change. But there’s more in store for the area: Techstars’ first Iowa accelerator will kick off in September 2020, while two other incubators geared toward the city’s long-standing agriculture and insurance industries are expected open in the same year. Des Moines has also seen a boost in population gains thanks to new employment opportunities courtesy of the area’s many high-growth companies. --Emily Canal

Albuquerque

Startups are growing in this desert community thanks to high-density work spaces.

No. 12 Rate of EntrepreneurshipNo. 19 Net Business CreationNo. 29 Wage Growth
The economic development puzzle is coming together in New Mexico's largest city, with a shiny new innovation zone downtown called InnovateABQ. It includes a startup incubator, an 11,000-square-foot maker space, and tech transfer offices from all of the area’s research universities and national labs. It also boasts a state-run $20 million Catalyst investment fund designed to bolster local VC investment that's already seeing results. One promising example, which has received Catalyst backing, is advanced medical lab startup BennuBio. Licensing technology from the University of New Mexico, the company develops and prototypes instruments on the InnovateABQ campus to measure the characteristics of cells. “We’re in the middle of the desert, so we’re resource constrained,” says John Freisinger, InnovateABQ’s executive director. Now with a physical space to bring together entrepreneurs and support organizations, he notes, collaboration within the startup community is getting more efficient. “It’s one stop and you can see what’s available,” he adds. Though Albuquerque’s startup ecosystem is still young, it enjoys a higher degree of founder connectedness than the global city average, according to a 2018 report from innovation policy startup and Inc.'s Surge Cities partner Startup Genome. That’s key to building a strong long-term entrepreneurship culture. --Lindsay Blakely

Indianapolis

One massive exit and a slew of government incentives lift this Midwestern hub.

No. 12 Early-Stage Funding DealsNo. 28 Net Business CreationNo. 29 Population Growth
Indy's businesses are still feeling the ripple effect of Salesforce’s $2.5 billion acquisition of local marketing software firm ExactTarget in 2013. After the purchase, ExactTarget co-founder Scott Dorsey started Indianapolis-based High Alpha--a “venture studio” that helps launch and fund local startups. Its portfolio includes Zylo, a SaaS management company founded by a former ExactTarget employee that raised a $22.5 million Series B round in September. Chris Baggott, another ExactTarget co-founder, founded several other Indy firms, including food-delivery startup ClusterTruck. In 2017, the state of Indiana backed a new $250 million venture fund, and last year it exempted SaaS companies from sales tax. The low cost of doing business is a major draw, says Mike Langellier, president and CEO of TechPoint, a nonprofit accelerator for Indiana tech businesses. “The beauty of a midsize city is that you can make an impact,” he says. “It’s not a megalopolis where everybody’s a number.” When it comes to net business creation, job creation, and population growth, however, Indianapolis growth is moderate, which could explain why it dropped to last place from No. 25 last year. --Sophie Downes

Methodology

How Startup Genome Selected the 2020 Surge Cities Index:

JOB CREATION
Over-the-year percent change in the number of jobs from Q1 2018 to Q1 2019.

POPULATION GROWTH
Percentage growth from July 2017 to July 2018.

NET BUSINESS CREATION
Over-the-year percent change in the number of business establishments from Q1 2018 to Q1 2019.

RATE OF ENTREPRENEURSHIP
Percentage of adults who are entrepreneurs, including solo-preneurs, regardless of industry or employment status in the 2018 to 2019 period.

WAGE GROWTH
Over-the-year percent change in average weekly earnings from Q1 2018 to Q1 2019.

HIGH-GROWTH COMPANY DENSITY
Number of high-growth companies for every 100,000 adults, including only Inc. 5000 firms with $2 million in annual revenue and 20% year-over-year growth for three years in 2018 and 2019.

EARLY-STAGE FUNDRAISING DEALS
Number of early-stage funding deals for every 100,000 adults from October 2018 to October 2019.

Inc. has long believed there’s an alchemy that happens when fast-growing companies, innovative activity, and an entrepreneurial environment coalesce in a particular geographic space. Inc. and Startup Genome, an innovation policy company, partnered to create the Surge Cities Index, the definitive ranking of the geography of growth in the U.S.

The Inc. Surge Cities Scores are calculated for the largest 100 metropolitan statistical areas (MSAs) in the United States, according to February 28, 2013, Office of Management and Budget criteria. We use an equally weighted average of the normalized scores of seven metrics.

Once we had the seven normalized scores, the composite index was then calculated for each MSA by computing an equally weighted average of the seven metrics. Finally, to compute the Surge Cities Score, each metropolitan area was ranked in order of its average composite index score.

On metric rankings: When the data allowed for more detailed/precise metrics (e.g., 2 or 3 decimal points), ties were not present. When the data was less exact, ties were present. For editorial purposes, we did not indicate ties.

Sources: Quarterly Census of Employment and Wages and U.S. Census Bureau's Population Estimates Program, Current Population Survey (CPS), American Community Survey (ACS), and Quarterly Census of Employment and Wages, Startup Genome, PitchBook, Inc. 5000

ABOUT STARTUP GENOME
With more than 100 clients across five continents in 38 countries to date, Startup Genome is the top research and policy advisory organization for governments committed to accelerating the success of their startup ecosystem. Read more at startupgenome.com.