Researchers at the University of Nebraska-Lincoln (UNL) released a new study on American entrepreneurship, and the results are fascinating. The study created an entrepreneurship index by state in order to rank which states were the best (and worst) places to start a new business in the U.S.
When most people think of start-ups, they think of tech giants launched by Silicon Valley in California. The UNL researchers, however, pegged North Dakota as the state with the best entrepreneurial environment, thanks in large part to the recent fracking boom. Here’s the full map showing each state’s score:
The economists who prepared the study scored each state based on five different factors:
Developed by economists from UNL’s Bureau of Business Research and its Department of Economics in the College of Business Administration, the index is based upon five key components: a state’s net growth in business establishments, per capita growth in business establishments, business formation rate, number of patents per thousand residents and average income for non-farm proprietors. The combination is designed to reflect key elements of an entrepreneurial climate: business startups and failures compared to population, innovation and income.
The top five states, in order, were North Dakota, California, New York, Kentucky, and New Hampshire. Texas came in at #7. The bottom five were Alabama (#46), Indiana (#47), New Mexico (#48), North Carolina (#49), and Michigan (#50). The study did not appear to take state tax policy into account, which might explain why both California and New York received such high scores.
The full list of state-by-state entrepreneurship rankings can be found here.