When most people think about startups, the first two places that come to mind are Silicon Valley and New York City. Not only have some of the country's biggest success stories come out of these two locations, the areas are also saturated with money from venture capitalists.
What most people don’t know is that there are other areas in the United States that have become very attractive for startups. Let’s take a look five of the country’s hottest startup cities for 2015.
Austin has long been known as a very tech-oriented city and has attracted many large companies over the years. Over the past quarter century, IBM (IBM), Texas Instruments (TXN) and other hardware companies have called Austin home.
Business incubator and accelerator Capital Factory allows startups to collaborate and meet with investors. Austin-based startups received a total of $620 million worth of funding in 2014—a 40 percent increase from the previous year. The availability of investment is a big draw for this college town, and it doesn’t hurt that the cost of living is 5 percent below the national average.
Boulder isn’t new to the startup scene. The city of just over 100,000 people has been attracting companies to the foothills of the Rocky Mountains for decades. Celestial Seasonings (HAIN) was founded in the city in 1969, and since then everything from natural food businesses to biotech firms to, most recently, technology companies have made Boulder home.
A 2013 study by the Kauffman Foundation showed that Boulder had six times more high-tech startups per capita than the national average in 2010. Boulder County is ranked as one of the top 20 most productive metro areas in terms of GDP as proven by how many successful companies have come from the area. National tech incubator TechStars is located in Boulder, which significantly helps bring a lot of young talent to this rising college town.
Kansas City, Missouri
When most people think of Kansas City, they probably think of a smaller Midwest city with amazing barbeque. Most may not consider it as a big startup hub. Thanks to Google (GOOG) Fiber and the Kansas City Startup Village, this perception is changing fast.
The low cost of living makes this city extremely popular for entrepreneurs to get their companies off the ground with little outside investment. One Kansas City company that wants to see the city’s startups flourish is Betablox. The program resembles “Shark Tank,” and stats have shown that any startup that goes through Betablox is twice as likely to succeed.
Des Moines, Iowa
A lot of people probably wouldn’t expect to see Des Moines on this list, but it is and for good reason. The city has little over 500,000 residents and a high concentration of small businesses: 133 for every 10,000 people, to be exact. The cost of living is nearly 10 percent below the national average, and it’s nearly 17 percent cheaper to own a house in Des Moines than the average U.S. city. That is a welcoming sign for anyone hoping to launch a new business.
Small businesses have a lot of resources available to them in Des Moines through The Greater Des Moines Partnership’s initiatives. Startup Iowa provides entrepreneurs with access to accelerators and incubators. Additionally, Plains Angels is a local group of angel investors that helps early-stage growth companies with funding and advice.
Nashville isn’t just for country music, it’s also for entrepreneurs. According to KPMG, the costs associated with running a business here are 5.1 percent lower than the national average. Young Nashville companies will want to get started with a local accelerator such as Jumpstart Foundry. The accelerator will put select companies through a 14-week mentorship program and provide them with $15,000 in seed money. The Entrepreneur Center, which offers mentorship and access to incubators to new companies in a wide range of industries, is another option.
The Bottom Line
The startup community across the U.S. is flourishing. No longer are exciting new companies limited to just Silicon Valley or New York City. Entrepreneurs are now branching out to other areas of the country where they can receive funding and find great talent.