Austin, Texas, has secured the top position in a recent ranking of the best U.S. cities for startups, as detailed in CommercialCafe’s “Best Cities for Startups” report published on December 10, 2023. The analysis focused on large cities with populations exceeding 500,000, evaluating metrics such as office costs, startup density, and survival rates.
The report highlights that Austin offers numerous advantages for entrepreneurs. It excels in metrics that assess the share of startups within the local economy and demonstrates impressive growth rates over the past five years, specifically from 2019 to 2023. According to the findings, approximately 12 percent of businesses in Austin are startups that have been active for less than a year, boasting a survival rate of 67.5 percent. This means that more than two-thirds of startups in the city are expected to remain operational for up to five years after their establishment.
Two notable examples of successful startups based in Austin include the home finance company Homeward and Jasper AI, a marketing platform powered by artificial intelligence and co-founded by Chris Hull, a Forbes 30 Under 30 honoree.
Austin’s performance on Kickstarter campaigns is particularly striking, with a success rate of 52.6 percent. Since the platform’s inception in April 2009, over 6,000 campaigns have been launched in Austin, with 3,187 achieving funding. The report attributes this success to the city’s high concentration of engineers and tech entrepreneurs, along with events like the annual South by Southwest (SXSW) festival, which serve as a launchpad for various projects.
The freelance workforce in Austin also plays a crucial role in supporting new businesses. The report notes a growth of 10.2 percent in the number of freelancers from 2019 to 2023, resulting in 46,655 freelancers in the city. According to Fiverr’s annual Freelance Economic Impact Report, these independent workers generated nearly $4 billion in 2023, underscoring their value to Austin’s burgeoning tech scene.
Despite these positive factors, the report indicates that startups may face challenges in securing affordable office space. The average asking price for a 1,000-square-foot workspace in Austin is approximately $45,456 annually, while coworking spaces for the same number of employees cost about $14,100 per year.
The report also emphasizes that Texas is a strong state for entrepreneurship, with several other cities ranking high for startup potential. San Antonio ranks second, followed by Dallas at third, Fort Worth at fourth, and Houston at seventh, all within the top ten for cities with populations exceeding one million.
For smaller cities, the top ten best places to start a business include:
1. Austin, Texas
2. Nashville, Tennessee
3. Indianapolis, Indiana
4. Tucson, Arizona
5. Mesa, Arizona
6. Charlotte, North Carolina
7. Fresno, California
8. Albuquerque, New Mexico
9. Las Vegas, Nevada
10. Louisville, Kentucky
The findings of CommercialCafe’s report underscore Austin’s vibrant entrepreneurial ecosystem, characterized by a blend of education, tech talent, and supportive infrastructures that foster the growth of new businesses. As the city continues to attract entrepreneurs, it solidifies its reputation as a leading destination for startups in the United States.
