Money Making Cities :Whether you’re an entrepreneur plotting to launch a startup or a CEO strategizing where to put another office, knowing where the next hot city is would be a game changer. Should you expand to Raleigh? Would you attract better talent in Austinor Atlanta? With the new Surge Cities Index, Inc. and innovation policy company Startup Genome crunched the data to score and rank the top 50 metro areas in the U.S. on seven key indicators–from early-stage funding metrics to job creation. Finally, here’s the smartest way to answer the age-old question: Where should you go next?
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Money Making Cities
1. AUSTIN
Austin is now growing four times faster than most of Silicon Valley–drawing talent and startups from all over the country.
Once known as a magnet for slackers, the so-called “Live Music Capital of the World” and home of the University of Texas-Austin had a reasonable cost of living, loads of sunshine, well-educated people, and a fun streak. Those are still the reasons people flock to Austin, but slacking off is most certainly not their goal. Today, the metro area, with a population of 2.1 million, is growing four times faster than San Jose and San Francisco (per capita), with entrepreneurs leading the way. Last year, Tyler Haney, founder of New York City-based athletic clothing company Outdoor Voices, relocated her venture-backed company here, as did Peter Thiel’s San Francisco venture capital firm, Mithril Capital. Tech giants including Google, Facebook, Amazon, and Dropbox have all established large presences here. And in December, Apple, which already has its second-largest outpost in Austin, announced it will be investing $1 billion to build a new campus that could eventually hold 15,000 new employees. With all the shiny new high-rises sprouting downtown, it can feel like the city has changed almost overnight, but in fact it’s been decades in the making. Austin-born originals like Dell, Whole Foods, and Trilogy Software have been luring talent to town since the ’80s–and then watching alums go on to become founders themselves. More recent successes, such as Homeaway, Bazaarvoice, and Deep Eddy vodka, have done the same. And South by Southwest allows the city to show itself off to the world’s startup elite every spring. The result: thriving startup scenes in food and drink, computer hardware, enterprise software, and–increasingly–consumer tech. Austin still has lots of live music, but today the city’s creative class is creating business as much as art.
2. SALT LAKE CITY
Mormons, skiing, and a herd of tech unicorns have colonized Silicon Slopes, the region with the greatest volume of high-growth companies.
Known as the Crossroads of the West–the first transcontinental railroad and the first transcontinental highway both pass through–the mountainside city also has another, slicker nickname: Silicon Slopes. Tech giants such as Adobe, Electronic Arts, and Oracle all have offices here. Meanwhile, homegrown internet businesses like Ancestry.com and Omniture now employ thousands of people and generate billions in revenue. Entrepreneurs here tend to hail from one of two schools, Brigham Young University, owned and operated by the Church of Jesus Christ of Latter-day Saints, or Utah Valley University. People move here not just because of the world-class skiing–or their Mormon roots–but also because it’s still much more affordable than other tech hot spots. In recent years, the region has added five new startups valued at more than $1 billion each, including education platform Pluralsight, smart-home equipment maker Vivint, and data analytics firms InsideSales.com, Domo, and Qualtrics. The founders of the latter two, Josh James and Ryan Smith, respectively, are the big entrepreneurial personalities in town.
3. RALEIGH
The state capital, part of the hyper-educated Research Triangle, is buzzing with software startups.
This former tobacco and textile town has been transformed into a software hub. Raleigh’s revitalized downtown is home to a number of fast-growth startups, including business software maker Pendo, which closed a $50 million Series D in 2019. Like many startups in the area, Pendo got its start in HQ Raleigh, the city’s dominant co-working space, which offers flexible leases and access to mentors. The Research Triangle–the area encompassing Raleigh, Durham, and Chapel Hill–boasts the fourth-most-educated population in the country, ahead of San Francisco, according to personal finance firm WalletHub. Forty-seven percent of the local talent pool holds a bachelor’s degree or higher, and many are from well-regarded local universities Duke, the University of North Carolina at Chapel Hill, and NC State. These schools all offer strong engineering and computer science programs, so the startup scene is software heavy. But there’s also a thriving food scene that includes Seal the Seasons, which freezes and distributes farmers’ crops. Overall, North Carolina companies raised $1.1 billion in 2017, up 36 percent from the previous year.
4. NASHVILLE
An abundance of hospital chains in the country music mecca has made it famous for something else: a new wave of health startups.
It has more than 20 college and university campuses, the most megachurches per capita in the country, and a thriving music economy, but the city’s biggest industry–and its main source of growth–depends on one undeniable truth: We all get sick and die. Six of the nation’s 10 biggest for-profit hospital chains are headquartered here, along with more than 800 health care companies. Now there is a wave of promising health startups, like Covenant Surgical Partners, an outpatient surgery center that was acquired by KKR last year, and Aspire Health, which makes house calls to help seriously ill patients manage their health care, and was acquired by Anthem in March. “So many people have come here over the years with a guitar and a dream,” says Sam Davidson, founder of Tennessee-made online gift retailer Batch. “Now, instead of wanting to make it big on Music Row, you want to make it big with a business idea.”
Money Making Cities
5. SAN FRANCISCO
San Francisco is booming when it comes to innovation, but the new jobs aren’t following. Now startups are fleeing to Oakland–and from the West Coast.
Silicon Valley might need a new name. While it’s still home to plenty of startup activity, the tech industry’s vanguard largely have moved 50 miles north to San Francisco. The Bay Area’s biggest-name startups–including Uber, Airbnb, and Slack–have taken root here, along with influential VC firms, like Benchmark. The migration is due to downsizing–thanks to cloud computing, software companies don’t need server rooms. Meanwhile, they can outsource business functions via Gusto and Zendesk. The main obstacle is the astronomical commercial rents–think $100 a square foot–and the higher salaries the cost of living requires. It’s a little cheaper in Oakland and Hayward, where food-science and energy startups are flourishing. Among the best-funded is the solar-panel financing company Mosaic, with $487 million in capital.
6. SAN JOSE
This Silicon Valley stalwart now has the highest home prices in the U.S.–and tech giants scrambling for alternative offices.
Fifty years ago, the fertile land between the Santa Cruz and Diablo mountains was covered in apricot and cherry orchards. Then came the semiconductor firms and three of the world’s most valuable companies–Apple, Google, and Facebook. While those firms–and nearby Stanford University–funnel a steady supply of would-be founders and talent, their sheer size has hindered the growth of the startup ecosystem. A critical shortage of office space and housing–San Jose has the highest home prices in the U.S.–has forced even the giants to get creative: Facebook plans to put up to 5,000 employees in a Mountain View WeWork, and it is building apartments near its campus.
–Jeff Bercovici
7. SAN DIEGO
Biotech, aerospace, and 157 breweries keep this SoCal startup community busy (and chilled out).
San Francisco may dominate software, but California’s southernmost city is the place for startups focused on life sciences and aerospace. Entrepreneurs can draw talent from the UC, San Diego campus and the surrounding military bases, as well as the offices of industry majors, including pharmaceutical giant GlaxoSmithKline and defense contractor Northrop Grumman. In 2012, Southern California’s largest commercial real estate company partnered with EvoNexus, a local incubator, to create startup co-working space the Vine. The larger community has flourished since; several biotech companies–Samumed, Gossamer Bio, Crinetics, ChaSerg Technology–have raised hundreds of millions of dollars or filed to go public this year. GoFundMe, the crowdfunding site, is now a household name. The city hosts 24 incubator and accelerator programs–and, after work, teams can head to one of San Diego County’s 157 breweries: It’s a craft beer mecca, too.
Money Making Cities
8. DENVER
Millennials are flocking to this booming city, and it’s not just for the weed–all 222 dispensaries, and counting.
Watch out for the hordes of Millennials: LinkedIn’s latest Workforce Report revealed this Colorado city is the second- most moved-to by 20- and 30-somethings (according to its members), after Austin. Technology-focused early-stage investment outfits like Denver Angels and Rockies Venture Club–and Techstars Sustainability Accelerator–are fanning expansion, while the fastest-growing segments here within tech are A.I. and machine learning, followed by blockchain and cryptocurrency, according to Powderkeg’s 2018 Tech Census. What local companies are making a splash? In October, cloud-based email service SendGrid sold to Twilio for $2 billion. Though the cannabis industry accounts for a small share of Colorado’s new businesses, cannabis venture fund CanopyBoulder is investing in non-plant-touching cannabis companies here such as PotGuide, GreenScreens (digital signage and advertising), and Würk (human resources and payroll processing). In October, Canadian cannabis company Canopy Growth acquired Ebbu, a hemp-research leader based in Evergreen. Paul Foley, founder of Colorado Startups, is about to launch the first- ever crowdfunded portfolio, SmartCapital. On his shortlist? Pepper, a bra company for small-chested women; a eucalyptus sheet-and-bedding company called Sheets & Giggles; and a dating app for mindfulness-loving people, MeetMindful.
9. ORLANDO
The destination best known for Disney is now a hotbed for geeky industries–and a new home for displaced Puerto Ricans rebuilding their lives.
While tourism and construction drive much of the Central Florida economy, Orlando has become a high-tech hub in its own right. There are more than 200 aerospace and aviation companies in the city. Its modeling and simulation industry–which designs programs used both for military training and to power rides at the nearby theme parks– attracts more than $4 billion in contracts every year. Over the past four years, Orlando has made efforts to cultivate early-stage startups as well, with the opening of the Canvs and Catalyst co-working spaces downtown and new seed funds and accelerator programs such as the FireSpring Fund, the Venture ScaleUp accelerator, and the health care-focused GuideWell Innovation Center. While the audio streaming site Grooveshark was Orlando’s best-known startup until it shut down as part of a music industry legal settlement in 2015, others are eager to make a name for themselves, including Fattmerchant, a payment-processing technology company that has raised more than $18.3 million, and Hoverfly Technologies, which makes drones that can capture aerial footage of live events and remain aloft indefinitely, thanks to powered tethers.
Money Making Cities
10. PORTLAND
This might be Nike’s hometown, but with software startups and a slew of new apparel brands, this Pacific Northwest city is impossible to pin down.
This Pacific Northwest city’s reputation as a haven for food enthusiasts is merited: Natural wine bars and critically lauded restaurants seem to open every week. But the biggest area of employment growth in the Portlandarea? Construction. Look out across the city’s skyline and you’ll see dozens of cranes in every direction. And though the local cannabis industry gets a lot of attention, the two sectors that are projected to grow the most over the next decade are slightly less sexy: health care and computer and electronics manufacturing. On the ground, the startup areas that are booming include tech companies (Jama Software and vacation rental company Vacasa have each raised more than $200 million); early-stage food companies like Umi Organic (organic fresh ramen noodles), Honey Mama’s (honey-and-cocoa bars), and Red Duck Foods (organic ketchup and other sauces); and game-changing apparel companies (Handful, Society Nine, Wildfang). Some startups, like Rumpl–which makes camping blankets and ponchos–were attracted to Portland because it’s home turf to Adidas, Columbia, and Nike.
11. PHOENIX
This Southwest region–now home to more than 300 technology companies–got the ultimate high-tech makeover.
The Phoenix area, once known for its hotels and low-wage call centers, is quickly developing a reputation as a hub for tech and entrepreneurship. The number of tech companies headquartered in downtown Phoenix has grown from 67 in 2012 to more than 300 today. Many of them–including WebPT (maker of web-based software for physical therapists) and Picmonic, which has developed a mnemonics platform for cramming med and nursing school students–are based in the newly revitalized Warehouse District. Galvanize–one of the largest coding schools in the U.S. and a tech co-working space–just opened a campus there, as did the Society for Technical Communication. Other rapidly growing industries in and around Phoenix include construction, cybersecurity, financial services, and health care. Unemployment is at an all-time low of 3.4 percent, and the area enjoyed the highest average wage increase across all industries in the U.S. last year.
Money Making Cities
12. SEATTLE
The city once known best for its cloudy weather is now booming with big tech’s clouds.
In the 1970s, amid Boeing layoffs, a famous billboard instructed the last person leaving Seattle to please turn out the lights. In the 1990s, the city was still attractively inexpensive, so Jeff Bezos put Amazon headquarters right downtown. Fast-forward 20 years and there’s a greater population influx than there was during the 1890s Yukon gold rush. According to the Census Bureau, the Seattle area has been gaining 1,100 new residents every week. Unemployment is at a historic low. Traffic, home prices, and homelessness are at all-time highs, with some locals now priced out and resentful of those they call Amholes. Seattle itself is being referred to by boosters as Cloud City, not because of the weather, but because of cloud computing firms Microsoft Azure and AWS and the growing Google footprint. There’s also a healthy VC presence, led by early-stage firm Madrona Venture Group, which has had a record four IPOs in the past two years–Apptio, Smartsheet, Redfin, and Impinj.
13. MIAMI
Immigrants, incubators, and innovation have given this beach town the highest rate of entrepreneurship in the country.
Tourism is a multibillion- dollar driver, but this immigrant-rich area also has a dynamic startup scene with a robust network of accelerators, boot camps, incubators, and co-working spaces–more by percentage than any other city in the nation, according to data firm Yardi Matrix. In fact, the Kauffman Foundation found that the Miami area was tops in the country for startup activity in 2017–ahead of Austin, Los Angeles, and San Diego. Driving it is a thriving outpost of the Cambridge Innovation Center, home to 250 early- and midstage companies, a shared wet lab for early-stage biomedical startups, and nearly 30 nonprofits. They include Code/Art, which provides coding workshops for school-age girls, and Venture Café, which has an initiative to support entrepreneurs in the historically black community of Overtown. “A lot of the innovation community’s stakeholders are operating in silos,” says Leigh-Ann Buchanan, founding executive director of Venture Café Miami. “We focus on being the connective tissue.”
Money Making Cities
14. JACKSONVILLE
Think the only Brooklyn is in New York City? This northern Florida city has attracted a slew of Millennials–and spawned a new generation of health-tech startups.
Perhaps more surprising than the tourism industry here–which contributes $3.2 billion annually to the local economy–is the steady growth of the city’s advanced manufacturing, financial services, financial technology, logistics, and health care sectors. Local tech accelerator PS27 invests in companies like BlueWave Technologies, maker of a device that uses ozone to sterilize orthotics and prosthetics, and Docity, a telemedicine platform. The city is home to more than 20 health care facilities, including outposts of the Mayo Clinic as well as the University of Florida’s innovative proton therapy cancer treatment center. But lest you think only retirees live here, Millennials are arriving in droves–particularly to the hipster 32204 ZIP code: Riverside, Five Points, and (wait for it) Brooklyn. RentCafé found this ZIP code to have the sixth-highest growth in Millennials, after ZIP codes in L.A., Manhattan, and Portland, Oregon. The city, along with four other agencies, recently applied for a $25 million federal grant to spearhead a high-tech innovation corridor, which would feature autonomous shuttles and interconnected sensors like smart lighting systems and flood-warning sensors.
Money Making Cities
15. BOSTON
The Silicon Valley for the octogenarian set is on MIT’s home turf. It also happens to have landed more early-stage funding deals than New York City.
Boston not only has a high rate of people over 55 starting companies; it’s also working hard to become the Silicon Valley for tech aimed at older people. Home to MIT’s celebrated AgeLab, the area has spawned a cluster of age-tech startups launching products like wireless headphones (Eversound) and virtual reality headsets (Rendever) that are optimized for seniors. In June, Amazon bought Somerville-based PillPack, which helps those who are on several medications, for close to $1 billion. Besides its big push in biotech, Boston also ranks first in the nation as a place to start social ventures, according to a 2017 report from Halcyon. Perhaps most gratifying, Boston this year outpaced New York for venture investment. Now it’s second only to you-know-where.
16. LOS ANGELES
Elon Musk, Dollar Shave Club, and Bird are just a few reasons Los Angeles is no longer a town only for Hollywood starlets.
More New Yorkers are jumping ship and moving to L.A. than ever–and not just for the 329 days of sun. The future of transportation is here, at all different speeds, with startups like Bird (See “Bird Is the Word,” page 98), Virgin Hyperloop One, and the Boring Company. E-commerce companies like the area for its massive, diverse consumer base of 13 million people, the two largest ports in the country, and the experienced talent they can tap from veterans like Dollar Shave Club. Early-stage companies can go to the Reum Brothers at M13 or the startup studio Science for capital and mentoring; for bigger rounds, Upfront Ventures’ Mark Suster or Greycroft’s Dana Settle are the go-to investors. When it comes to engineers, L.A. graduates more of them every year than any other U.S. city. And then there’s the eventual impact Venice’s Snap will have on the region. “Regardless of what happens to Snap in the future, even if it isn’t around in 10 years, the outcome will create pools of talent and innovation that will be here,” says investor Courtney Reum. Case in point: According to Amplify VC Eric Pakravan, at least 100 L.A. companies can be traced back to talent that came out of MySpace.
Money Making Cities
17. DALLAS
With no corporate income tax and few regulations, Dallas is drawing talent–and creating jobs.
No metro area gained more residents between July 2016 and July 2017 than Dallas, and it’s clear why: In the same 12 months, it gained 108,000 jobs. Companies come for the limited regulations and zero corporate income tax. There’s also a thriving startup scene. Online sporting goods seller OrderMyGear closed a $35 million Series C round of funding this spring; impressive A rounds went to ridesharing startup Alto ($13 million) and life insurance tech firm Bestow ($15 million). The nonprofit Dallas Entrepreneur Center, helmed by Alyce Alston, serves as a hub for mentorship, funding, and networking.
18. ATLANTA
No city has a stronger black entrepreneur community than Atlanta. Now it’s figuring out how make sure the funding follows.
This sprawling Southern city was a patchwork of isolated neighborhoods until entrepreneur David Cummings–who sold his marketing startup Pardot for $95 million in 2012–started Atlanta Tech Village six years ago. The co-working space, now home to 300-plus startups, eventually spawned a movement of similar hubs throughout the city. Two-year-old private membership club the Gathering Spot has become a particularly important destination for a thriving black entrepreneur scene that includes grads from Georgia Tech, Morehouse, Spelman, and Clark Atlanta University–all of which have top engineering and computer science programs for people of color. While the city is best known for icons like CNN’s Ted Turner and Home Depot’s Arthur Blank–and most recently Mailchimp’s Ben Chestnut–its current black founders are working to reach similar levels of success so they can fund those who will follow. “We’re trying to create this momentum where we can start having major exits or major growth in our businesses to really start shaping the ecosystem,” says Candace Mitchell, a Georgia Tech grad and founder of Myavana, a digital hair care startup for people of color.
Money Making Cities
19. WASHINGTON
Amazon’s new Crystal City outpost will be massive, but it won’t be the only game in town. Washington, D.C., has more high-growth companies than nearly any other city in the country.
Amazon’s plopping half of its new outpost in Crystal City, Virginia, will create opportunities–and challenges, particularly for businesses competing with the tech giant for talent. Virginia Tech’s promise of a new $1 billion innovation campus will help. Cybersecurity is among the most vibrant ecosystems here, with many startups staffed by former NSAers. One star is Appian, a cloud software firm whose decision–post IPO–to stay local and add 600 jobs buoyed boosters of the thriving Dulles Tech Corridor. Edtech is surging, with online course provider EverFi raking in $251 million in funding. And a unicorn was born when under-the-radar A.I. company Afiniti raised $130 million on a valuation of $1.6 billion.
20. LAS VEGAS
Zappos’s Tony Hsieh didn’t reinvent Las Vegas, but his audacious vision has had a lasting effect.
When times are good, tourists come to play. When times are bad, well, Las Vegas gets hit hard. After cratering during the recession, housing prices in September were at their highest level in 11 years, and the city is picking up talent priced out of California and Hawaii. While Zappos CEO Tony Hsieh’s $350 million-plus revitalization vision fizzled, it brought much-needed attention to the area. Another upside: Some of the startups drawn to Hsieh’s plan decided to stay and are now thriving, including blockchain startup Hosho, A.I. influencer app Influential, and women-only co-working space Bloom.
Money Making Cities
21. MINNEAPOLIS
This Midwestern city ranks highest in the country when it comes to starting business–and now local corporations Target and General Mills want in on the action.
Nineteen major corporations are headquartered here, and they are actively hedging their futures on the startups bubbling up around them. In 2017, General Mills’ incubator, 301 Inc., invested in No Cow, a vegan pea-and-rice protein-snack upstart. UnitedHealth Group has helped produce a generation of talent hatching medtech startups, including Zipnosis and Gravie. And the ever-omniscient Target has an accelerator with Techstars, resulting in pilot programs with several retail startups, including meal-kit company Local Crate. In 2017, Conagra paid $250 million for BoomChickaPop, a popcorn startup launched by wife-and- husband duo Angie and Dan Bastian. While big players still dominate in the city, startups are seeing an increase in funding: 48 Minnesota-based startups received $495.1 million in venture capital last year, up 40 percent from 2016.
22. CHARLOTTE
Fintech startups dominate the North Carolina city best known for, well, banking.
It’s no longer the country’s second-largest banking center–having dropped to No. 3 last year–but with Bank of America headquartered here and Wells Fargo a major employer, it’s no wonder Charlotte has nurtured a new crop of fintech startups. Now the biggest complaint is that the range of businesses isn’t broad enough. Local standouts include Red Ventures, which made news last year by acquiring Bankrate; AvidXchange, which reached a valuation of $1.4 billion in 2017; and enterprise software maker Tresata, which became the city’s third unicorn in October. Other expanding sectors: advanced manufacturing, logistics, and health. Among those leading Charlotte’s charge: Devin Collins, associate director of the University of North Carolina Charlotte’s Ventureprise, and Sherrell Dorsey, president and CEO of African-American startup network Blktech
23. RIVERSIDE
Wedged between the ocean and the mountains, this unlikely SoCal town now has greater startup density than Silicon Valley.
The Inland Empire is about 60 miles east of Los Angeles, that idyllic midway point between the mountains and the coast, where skiing and beaching on the same day is actually possible. Riverside has 92.4 startups for every 1,000 businesses, which is greater startup density than in San Jose, San Francisco, or Boston. That’s thanks in large part to the University of California, Riverside, which has partnered with the business community to create several programs supporting entrepreneurship, including the four-year-old ExCite accelerator-incubator and a proof-of-concept grant program named Epic. Last year, it launched the $10 million Highlander Venture Fund, in partnership with Vertical Venture Partners, a Sand Hill Road early-stage VC. Noteworthy startups to emerge from the program include Beam-CA, which recently won a National Science Foundation grant to develop its sensitive magnetometer that can operate at room temperature–a huge deal in health care–and FarmSense, which makes sensor-and-algorithmic- powered insect traps.
Money Making Cities
24. TAMPA
Tampa has more high-growth companies per capita than New York City, and now it’s looking to launch its own version of SxSW.
Detroit may have its entrepreneur-benefactor Dan Gilbert, but Tampa Bay has Jeff Vinik. The owner of the NHL’s Tampa Bay Lightning is behind Embarc Collective, an innovation hub launching in March that will aggregate founders, accelerators, and VCs. It will live just north of the new mixed-use waterfront district that is another Vinik project– in conjunction with Bill Gates’s Cascade Investment. Vinik is also an investor in the national fund and accelerator Dreamit, which recently opened an outpost here. It joins Tampa’s largest homegrown accelerator and co-working space, the Tampa Bay Wave, which specializes in health, education, and marketing tech–three of the area’s dominant new industries. Among the Wave’s entrepreneurs-in-residence are the founders of Tribridge and MyMatrixx, two companies that made lucrative exits in 2017. The region’s other hot companies include Peerfit, which offers corporate fitness through local gyms and has raised more than $23 million. And the second Synapse innovation summit–Tampa’s answer to SxSW–was expected to attract 5,000 people in January.
Money Making Cities
25. INDIANAPOLIS
With its low cost of living and cultural flair, both 20-somethings and tech companies are giving into the pull of this Midwestern city.
This Midwestern city is finally benefiting from some local successes: When Genesys bought Interactive Intelligence and Salesforce bought ExactTarget, a few of those founders stuck around and created new startups or venture capital firms. The arrival of Salesforce has been a boon for the city–not just for the promise of $40 million in investment but also for putting a major software company’s name on the city’s (and state’s) tallest building. This year, Indian outsourcing tech company Infosys also opened an office, with the promise of 2,000 jobs by 2021. With a low cost of living and world-class sporting and cultural institutions, it’s an attractive spot for Millennials, too.
Money Making Cities
26. NEW YORK
A new wave of e-commerce startups are redefining the finance capital of the world (and its neighbor, Newark).
As the number of technology jobs in New York City grew 30 percent in the past 10 years–twice the rate of its population growth–it has welcomed one unicorn after the next: BuzzFeed, Warby Parker, Etsy, WeWork. The city has also become the center of the boom in direct-to- consumer companies–startups, like Glossier and Away, that use highly targeted advertising to market their brands from their own websites. “New York’s always been a finance city, and it’s always been an advertising city, and direct-to-consumer businesses are primarily marketing and financial-modeling exercises,” says Jesse Horwitz, a lifelong New Yorker who founded Hubble, a direct-to-consumer seller of contact lenses, in 2016. Meanwhile, Newark–NYC’s long-troubled neighbor–has begun carving out its own startup identity. Audible, Newark’s largest tech company, recently funded the creation of Newark Venture Partners, a $50 million fund that aims to host early-stage businesses hatched there, like A.I.-powered health-monitoring technology startup Ejenta. And the audiobook subsidiary’s parent, Amazon, is about to dig its tentacles even deeper into the region with its new Long Island City outpost.
27. COLUMBUS
A Rust Belt turnaround 20 years in the making is now going all-in on A.I.
Transformation takes time, and venture capitalist Rich Langdale began to change the course of Columbus’s startup scene 20 years ago when he created what is now the Center for Innovation and Entrepreneurship at Ohio State University. Decades later, it’s attracted Silicon Valley transplants like Chris Olsen and Mark Kvamme, former partners at Sequoia Capital who now run the biggest VC firm in town. Meanwhile, local corporations, including Nationwide Mutual Insurance and Grange Insurance, have started funds to invest in startups. Now Columbus is betting on its 2016 win of the U.S. Department of Transportation’s $40 million Smart City Challenge. The city is rolling out nine projects from their Smart Columbus plan that are all about electric vehicles, self-driving vehicles, and smart sensors.
28. SACRAMENTO
Priced out Bay Area companies are discovering this oasis in California’s Central Valley, where engineers cost half as much.
Eighty miles northeast of San Francisco, California’s sleepy capital has long angled for some of the Bay Area’s economic dynamism. Now that’s starting to happen, thanks to a housing-and-affordability crisis driving startups out of the Bay Area. Sacramento has amenities tech companies seek, like a top-tier university (University of California, Davis) and plenty of outdoor activities. Housing is so cheap that startups can pay their engineers half as much and they still have more disposable income. The city is partnering with UC, Davis on a new innovation campus to attract more startups like SupportPay, a platform for child-support arrangements, which took advantage of a $100,000 subsidy to relocate from Santa Clara in 2016.
Money Making Cities
29. MILWAUKEE
Brew City is making a number of bets–on everything from its massive new Milwaukee Bucks’ arena to its co-working hub for artists in the revitalized Pabst plant.
At the center of this city’s building boom is the Milwaukee Bucks’ new arena, Fiserv Forum. Half a mile away sits the Pabst Brewery complex, which includes Nō Studios, a new 40,000-square-foot artistic co-working hub with tenants like startup accelerator Gener8tor. Funding has been tough to come by here, but companies like Northwestern Mutual, which has its own venture fund, are helping turn it around. The latest challenge? Stemming the Millennial brain drain. Early this year, Wisconsin blitzed Chicago with a $1 million “Wisconsin. It’s More You” ad campaign aimed at poaching young professionals.
30. SAN ANTONIO
Redevelopment is booming in South Texas, where entrepreneurs-turned-billionaires are footing the bill.
Affordable housing, business incentives, and jobs–especially high-paying ones in finance, cybersecurity, tech, and defense–are drawing workers and entrepreneurs alike. Meanwhile, two local billionaires are busy boosting development. Graham Weston, co-founder of Rackspace, donated $15 million to expand the University of Texas at San Antonio and is nurturing a tech district in town. Kit Goldsbury, former owner of Pace Foods, is behind the massive Pearl District redevelopment. And the startup scene is as diverse as the city’s residents: Headline-grabbing companies include Mailgun Technologies (an automated email platform for developers spun off of Rackspace), Merge Labs (a VR-product creator), and WellAware (an oil and gas data platform).
31. OKLAHOMA CITY
These days every city has an Innovation District– even Oklahoma City.
After the oil boom went bust in the 1980s, Oklahoma City’s locals wrote their own comeback story, approving multiple temporary sales-tax hikes to buck up the faltering economy and near-deserted downtown. Major capital improvement plans followed. Decades later, they’ve revitalized the city, which includes the new Innovation District, a neighborhood surrounding the Oklahoma Health Center that’s a hub for research companies. Meanwhile, nonprofit i2E has been funding and mentoring hundreds of local and state science-oriented startups for the past 20 years. One recent success story is Tetherex Pharmaceuticals, which raised $50 million earlier this year.
32. HOUSTON
This city is diverse, it’s progressive, and it’s plush with jobs. And it’s in Texas.
Nearly one in four residents here is foreign born, and the median age is almost four years younger than the country median. What’s the draw? Low cost of living and lots of jobs. Unauthorized immigrants or noncitizens with legal status fill nearly half of the city’s construction jobs–an industry that’s grown 14 percent since Hurricane Harvey. The service industry is also a standout, but the city’s once-lagging startup scene is catching up. Houston recently almost matched Austin in venture capital funding. Health care and energy startups are strong, with money pouring into companies like Procyrion (creator of a micropump to manage chronic heart failure), OncoResponse (an immuno-oncology firm), and Enchanted Rock (a utility).
33. ST. LOUIS
Forget Silicon Valley. The most exciting innovations happening in agtech are in this Midwestern city.
The home of the Gateway Arch might be better known as the Turnaround City. After experiencing a decline for 15 years, St. Louis has increased its rate of business creation every year since 2009. It now has 200 to 350 active tech startups and more than 50 support organizations centered on three hubs: downtown accelerator T-Rex, the 200-acre Cortex Innovation Community, and the 39 North district near the Yield Lab North America agtech accelerator. Headed by Thad Simons, the Yield Lab launched a $150 million venture fund last year. September saw two local startups nab Series C funding: Crop improvement company Benson Hill Biosystems raised $60 million in a round led by GV, and Galera Therapeutics, which develops cancer drugs, secured $70 million in equity. Insider tip: Eric Gulve, president of evergreen investor BioGenerator, is the local go-to for all things bioscience, and for a bird’s-eye view of the startup scene, there’s Ginger Imster, VP of innovation and entrepreneurship at the St. Louis Economic Development Partnership.
34. PHILADELPHIA
This East Coast city flaunts one of the best business schools in the country, but its best kept secret is immigrant entrepreneurs.
Immigrants have been flocking to Philadelphia because it’s a sanctuary city–and cheaper than its neighbor New York. Philly counts more than 40,000 immigrant entrepreneurs, running everything from tech companies (Cloudamize, Haystack Informatics) to food trucks (Chez Yasmine, Delicias). This spring saw the second citywide Immigrant Business Week, kicked off by Mayor Jim Kenney, who has traveled to SxSW to stump for Philly startups. On the tech front, the University of Pennsylvania’s graduate program ranks third and its undergrad program ranks fifth globally in the production of venture-backed entrepreneurs, according to PitchBook. Comcast-NBCUniversal, Philly’s largest tech private employer, has a new accelerator, whose first class includes a game console startup from the son of Atari and Chuck E. Cheese’s founder Nolan Bushnell. And the city continues to brew successful coffee companies, including La Colombe, now in five states and D.C., and Saxbys Coffee, which is colonizing college campuses along the East Coast.
35. RICHMOND
Richmond’s thriving startup scene, which includes a plant-protein innovator and a maker of an opioid antidote, is rich with creativity.
In a state where the main private-sector industry for 400 years has been agriculture, it’s no surprise Richmond has its share of food-centric startups. Standouts include insulated-packaging manufacturer TemperPack, which scored $4.5 million from Closed Loop Fund in July, and plant-protein product specialist Nutriati. Beyond that, the city’s entrepreneurs resist classification. Lighthouse Labs, led by Todd Nuckols, has nurtured companies that offer Lyft-like service for non-emergency medical transport (RoundTrip) and provide support to parents of autistic children (AnswersNow). Controversial pharma startup Kaléo is a local hero: This spring it began offering an opioid-overdose antidote for free to eligible patients in some states. Countering a shortage of early-stage capital are $4 million fund Trolley Ventures, founded in September, and VC firm NRV, which last year launched a $33 million early-stage growth fund.
Money Making Cities
36. CHICAGO
RxBar, 1871, and, yes, Groupon, continue to define (and redefine) the Windy City.
Just like its diverse neighborhoods, Chicago’s business culture has many faces: No single sector owns more than 14 percent of the economy. Still, with a 33 percent increase in tech employment from 2011 to 2016, it’s clear where much of the city’s entrepreneurial energy is being generated. Chicago is home to tech incubator 1871; in April, Betsy Ziegler became its first female CEO, replacing the ubiquitous Howard Tullman (an Inc.com columnist). Logistics software rivals Project44 and FourKites have had big rounds–the former a $45 million Series C in October, the latter a $35 million Series B last February. In 2017, when protein-bar maker RXBar was acquired by Kellogg for $600 million, it further validated the city’s bustling food startup scene. Up-and-comers now include Simple Mills and Tiesta Tea. But no matter how the startup world hums, people still talk about Groupon–or at least about Eric Lefkofsky and Brad Keywell, the two co-founders who remain in town. Their latest projects, Tempus and Uptake, are each said to be valued at $2 billion or more.
37. BIRMINGHAM
Former NBA star and Alabama native Charles Barkley is working to help fuel this city’s rebirth.
The city’s Innovation Depot is the largest entrepreneurial support system in the Southeast, with more than 100 companies. Startups here specialize in health tech and medical devices, with a niche in data security. Local successes include Shipt, the grocery-delivery service purchased by Target in December 2017 for $550 million. And in September, the Alabama Futures Fund launched the largest seed-stage investment fund in Alabama history. Among its big-name backers is former NBA star and now-analyst Charles Barkley.
Money Making Cities
38. BALTIMORE
Which underdog city dominates cybersecurity startups? Under Armour founder Kevin Plank’s hometown, where he’s helping fund a million-square-foot innovation district.
Under Armour founder Kevin Plank reportedly committed more than $300 million to a $5.5 billion public-private waterfront development at Port Covington, which will house the company’s new headquarters, along with an innovation center and over a million square feet of office space. It’s been nicknamed Cyber Town, a nod to the area’s cybersecurity industry, which gets a boost from its proximity to the nation’s capital. The scene is fueled by incubators like Betamore, Bwtech@UMBC, and Emerging Technology Centers, which has aided more than 500 companies since 1999. Johns Hopkins provides a strong biotech pipeline–a spinout, Dracen Pharmaceuticals, raised a $40.5 million seed round this year to develop drugs discovered in the university’s lab. Another plus: In a recent study, Maryland ranked first of any state in the per-capita business ownership rate for women and people of color.
39. PITTSBURGH
There’s no city that does robotics (and food halls) better than Pittsburgh.
More than 60 robotics companies and self-driving-car startups have transformed Pittsburgh into one of the earliest and most successful industrial-economy reboots. Powered, in part, by Carnegie Mellon’s Robotics Institute, the city attracted $687 million in investment in 2017, a record for tech entrepreneurs there. The University of Pittsburgh and its medical center continue spinning out startups in the life sciences and digital health sectors. To capture all this innovation, a new public-private partnership called InnovatePGH is working to create more startup-friendly office space and amenities in the Oakland Innovation District and to connect it with neighborhoods like East Liberty. That neighborhood is home to the city’s top accelerators, AlphaLab and AlphaLab Gear, and also of language-learning platform Duolingo, Pittsburgh’s highest-profile non-robotic startup, with a $700 million valuation. For now, all eyes are on Aurora Innovation and Argo AI, which last year received $1 billion from Ford. And the newest movement in this emerging culinary paradise? A smarter way to launch risky restaurant businesses. Three years ago, former Navy officers Benjamin Mantica and Tyler Benson hatched Galley Group, which applies the tech accelerator model to chefs and food halls.
40. KANSAS CITY
Health care and Hallmark dominate Kansas City, where the startup scene is as creative as it is generous.
The city got a boost when, in 2011, Google announced it would test Google Fiber there. Investments in startups followed, reaching $540 million in 2017, as did a 290 percent increase in access to capital from 2013 to 2016. An accelerator program hosted by Sprint and Dairy Farmers of America supports a group of startups every year, and Hallmark has given pop-up space in its stores to K.C.-based businesses. Still, the city is dominated by the health care industry, which accounts for four of its top five private-sector employers.
41. NEW ORLEANS
New Orleans’s angel investors go bullish on software, pharma, and bioinnovation.
Historically, the Crescent City’s economy has been driven by three industries: tourism, oil and gas, and shipping. All three are still going strong, but the city is moving beyond that: The NO/LA Angel Network is investing in bioinnovation, internet bandwidth, pharmaceuticals, and a dating service that uses DNA. Construction is still booming post-Katrina, with significant investment pouring in over the past five years. And the area’s population continues to grow: Today, it has nearly 1.5 million residents, surpassing its pre-Katrina days.
42. CINCINNATI
A public-private partnership that’s been decades in the making has helped make Cincinnati a talent magnet.
After racially charged riots broke out there in 2001, Cincinnati hired a real estate consultant who offered this advice: For the city to thrive, it would need to address two of its roughest neighborhoods. The Cincinnati Center City Development Corporation was soon created by the then-mayor, working with major community and business players, including the former CEO of Procter & Gamble. Today, one of those neighborhoods–Over-the-Rhine, once among the most dangerous in the country–has become a hotbed of commercial activity, linked via streetcar to the neighboring downtown. The district is now also attracting talent and money: Aspiring founders flock to the Institute for Entrepreneurship at Miami University, while VC funding for local startups is expected to hit more than $100 million by the end of 2018. But perhaps most telling is that the city’s startup scene has become a magnetic force: 71 percent of tech startup employees in Cincinnati went to college outside of Ohio.
43. LOUISVILLE
Senior citizens wearing VR headsets? It’s happening in Louisville, where a cluster of aging-related businesses are surfing the gray wave.
Louisville is busy making things again. Between 2011 and 2017, manufacturing jobs picked up 30 percent. And the city has its hands in a little bit of everything: cars, whiskey, appliances, and, of course, those eponymous baseball bats. That diversity is one reason Louisville wasn’t hit as hard as other manufacturing cities by the recession. The Kentucky Derby alone has a $400 million impact, and, as home to UPS’s 5.2-million-square-foot processing facility, the city is still a major shipping hub. A less flashy fact is that Louisville has the country’s largest concentration of headquarters for aging-related businesses–nursing homes, rehab, hospice care, in-home health care. A gray wave is headed for the country–by 2035, more people in the U.S. will be age 65 and older than under 18–and Louisville sees a torrent of new elder care businesses heading its way.
Money Making Cities
44. PROVIDENCE
Universities and accelerators have turned this once entrepreneur-free city into a startup engine.
Thirty years ago, Providence was no place for entrepreneurs. “There were no other startups, no infrastructure or support,” recalls Danny Warshay, director of Brown University’s Center for Entrepreneurship. Today, resources abound–from early-stage funding (Slater Technology Fund; Cherrystone Angel Group) and accelerators (MassChallenge) to organizations like the Lady Project (a networking nonprofit for female entrepreneurs). Top culinary school Johnson & Wales and RISD have also helped nurture many food startups and design-focused innovators in the area.
45. DETROIT
With the highest density of engineers in the country, Detroit is reinventing itself by leading the next mobility boom.
Autonomous-car hardware. Sensors. Lidar. Chances are, if there’s something that has to do with mobility, a startup in Detroit has touched it. Motor City is knee-deep into its transportation reinvention: May Mobility, a spinout from the University of Michigan, builds autonomous shuttles and operates a route in downtown Detroit. Roush Industries built 150 of the self-driving cars for Waymo. Last year, PlanetM Landing Zone launched to connect mobility startups like Lyft and Mapbox with Detroit’s traditional automotive industry. And accelerator Techstars Mobility, founded in 2014, has deployed $67.4 million in venture funding, with two exits under its belt, including the sale of ridesharing startup SPLT to Bosch this year. With Michigan’s having the highest density of engineers in the country–and the highest concentration of those employed in Detroit’s Wayne County–it’s no wonder the majority of VC money getting poured into the city ends up in mobility and IT.
Money Making Cities
46. HARTFORD
Hartford gets its groove back by doubling down on manufacturing–and social impact startups.
Despite years of state budgetary woes, the Hartford area is on an upswing–thanks, in part, to a rebound in manufacturing. Aerospace company Pratt & Whitney can’t keep up with jet engine orders, and Otis Elevator does over $12.3 billion in net sales. Pioneering accelerator ReSet, which has a social impact focus, has graduated 100 area companies over the past five years. Toolmaker Stanley Black & Decker recently launched a manufacturing accelerator with Techstars. And Hartford–the “insurance capital of the world”–was named one of the state’s four Innovations Places, making it eligible for $2 million in matching funds, part of which it’s putting toward an accelerator aimed at insurance startups.
47. MEMPHIS
From BBQ and whiskey to accelerators, this iconic Southern city has taken a high-tech spin.
When, in 2017, a 13-foot neon rooster came to rest atop Old Dominick Distillery, the first whiskey maker in Memphis, locals cheered–but it’s not the only thing they have to crow about. Health care and logistics are big job creators; St. Jude Children’s Research Hospital is in the middle of a $7 billion expansion strategy, and FedEx, the city’s largest employer, is spending $1 billion to modernize its sorting facility. A 1.1-million-square-foot former Sears distribution center now holds apartments, restaurants, and startups, like Tech901, which trains locals to meet area IT needs. Nearby, medical device accelerator ZeroTo510 has cranked out 29 companies in six years. Young entrepreneurs like the city for its low startup costs and cultural pedigree–a deep civil rights history, a thriving music scene, and BBQ bragging rights.
Money Making Cities
48. CLEVELAND
Why the next great health innovation will most likely emerge from this Rust Belt city (and not Silicon Valley).
After losing several Fortune 500 companies in the 2000s, this Rust Belt city is reinventing itself as an entrepreneurial haven, thanks to heavy bets from government and local philanthropists. Healthtech is central, as is the influence of Case Western Reserve University. Some feel the city needs to broaden its economy beyond what Danielle Sydnor, executive director of the Northern Ohio Economic & Community Development Institute, calls “eds and meds.” The most recent success story is Cleveland HeartLab, which specializes in evaluating heart disease risk and was acquired by Quest Diagnostics in 2017. A key player in town: Russell Donda, a medical device expert who serves as entrepreneur-in-residence at three top organizations, helping founders assess the commercial feasibility of their technology.
49. VIRGINIA BEACH
This federal government startup breeding ground is churning out companies that produce everything from autonomous vehicles to cutting edge medical science,
With defense contracting, shipbuilding, and Langley Research Center all in the region, about 40 percent of the economy here is directly tied to the federal government. Maritime logistics and tourism are big as well, but business leaders are eager to diversify the economy. 757 Angels is a major player in the percolating startup ecosystem, investing in firms like Embody (cutting-edge treatment provider for tendon and ligament injuries) and Psionic (creator of lidar technology for autonomous vehicles). Reaktor Business Technology Innovation Center, which recently raised nearly $10 million, is busy nurturing aerospace startups. And colleges are doing their part: Old Dominion started an entrepreneurship program two years ago, and an incubator is coming soon to Norfolk State.
50. BUFFALO
Elon Musk might be giving Buffalo the cold shoulder, but innovation is alive and well in this upstate New York manufacturing haven.
Few cities can take advantage of a catalyst like the Buffalo Billion, the development plan New York governor Andrew Cuomo announced in 2012 to invest $1 billion into the region. The program’s impact has been widely felt: Today, Buffalo’s startup scene benefits from a boom in health care construction–including a $270 million children’s hospital and a $375 million medical school–and such entrepreneurial organizations as the Billion-funded Buffalo Manufacturing Works. Still, the area remains a talent exporter, thanks in part to a lack of venture capital. Those that have landed funding include auto seller ACV Auctions, which scored $31 million in Series C in February 2018, and cellulose-insulation maker CleanFiber, which has raised $4.9 million to open a factory in nearby Blasdell. Both came out of the 43North startup competition, also funded by–you guessed it–the Billion.
