There's no single factor behind a thriving start-up culture, but with the help of Atlantic senior editor Richard Florida, Arizona State University's Jose Lobo, and the University of North Carolina-Charlotte's Deborah Strumsky, we've put together a map that allows for a comparative assessment of start-up vitality for 35 metropolitan statistical areas (MSAs):Map by Alex Miel, text by Brian Resnick
Here's how to read it:
- Milken High-Tech Economy Ranking: Using 2007 Data, the Milken Institute ranks North American metropolitan regions on their ability to sustain technological industries. The ranking is out of 393 regions and is compiled from an algorithm which combines the regions' share of North American wages, regions' share of North American employment, and other geographic factors. Citation: North America's High-Tech Economy:
The Geography of Knowledge-Based Industries
Start-Up-Birthrate Ranking: Start-up birthrate is calculated by dividing the number of new establishments with 20 or fewer employees (start-ups) by the initial number of establishments with 20 or fewer employees. The rankings on the map are out of 939 MSAs. However, it is important to note that a high birthrate does not necessarily imply overall business growth (start-up death rate can also be calculated). What it does suggest are the areas of the country were people are taking risks on new business ideas. Citation: 2008 data from the U.S. Businesses Division of the Census Bureau
Accepted-Patents Ranking: Patents can take several years to process, which makes accepted patent per 100,000 residents a good lagging measure of innovation. The disclaimer here is that a high number of patents per capita is not the perfect proxy for start-up development. For instance, Corvallis Oregon has one of the highest per capita accepted patent rates (No. 12 in 2008). But most of the patent there stems from Hewlett Packard, not start-ups. We chose accepted patents rather than submitted patents per capita to better reflect invention quality. Ranking is out of 365 metropolitan statistical areas. Citation: Patent database assembled by Deborah Strumsky (UNC-Charlotte) and Jose Lobo (Arizona State University).
Entrepreneurs Per Million People: The Kauffman foundation publishes a yearly report on entrepreneurial activity, and calculates a ratio of first-time business owners (entrepreneurs) to the general population. The report provides data for the top 15 largest MSAs. Citation: Kauffman Index of Entrepreneurial Activity: 1996-2010
Population With College Degrees: It's not enough to have inventions, entrepreneurs, and a thriving high-tech environment, start-ups need qualified labor. The higher percentage of the population with advanced degrees, the larger the pool of top-tier workers. Citation: U.S. census data on highest levels of educational attainment.
Research Centers: Research universities can play a key role in driving innovation in their own backyards. Graduate students tend to start companies with support (data storage, computing power, professors' advice) from the university. Faculty members tend to be early financial backers and can provide critical introductions to venture capital. The schools themselves sometimes take a stake in promising start-ups. It all adds up to a virtuous cycle that can benefit both the entrepreneurs and the research centers.
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