District of Columbia leads with 1 in 326 odds of starting a High-Growth Company. Providence is the city with the worst odds—1 in 3,297.
A High-Growth Company is defined as achieving $2M+ in revenue with 20% annualized growth over a 3-year period. This definition comes from page 10 of the 2017 Kauffman Index of Growth Entrepreneurship.
The data table below shows the odds of starting a High-Growth Company in each major city in America. This data serves as a baseline for the ecosystem innovation fund model that I introduced in Innovation Casino. I am sharing my research notes here so that you can incorporate this data into your angel investing or venture capital models.
|United States Metro Area||1 in X companies High-Growth; X=|
|Austin-Round Rock-San Marcos||420|
|San Diego-Carlsbad-San Marcos||674|
|San Jose-Sunnyvale-Santa Clara||1,059|
|Los Angeles-Long Beach-Santa Ana||1,104|
|Miami-Fort Lauderdale-Pompano Beach||1,241|
|United States (total country average)||1,265|
|New York-Northern New Jersey-Long Island||1,327|
|Virginia Beach-Norfolk-Newport News||1,399|
|San Antonio-New Braunfels||2,452|
|Providence-New Bedford-Fall River||3,297|
The underlying data for this analysis comes from the field on the Kauffman Index called “High-Growth Company Density.” This field is a measure of how many High-Growth Companies out of every 100,000 companies exist in a metro area. I divided 100,000 by the High-Growth Company Density field to obtain the above values. My research can be found in this Google sheet. I used this research to answer the following questions on Quora:
- What is the best city in the US to start a business?
- What are the pros and cons of using bootstrapping rather than the other types of start-up funding?
- Should voting rights equal equity shares when incorporating a startup?
Sources: Morelix, Arnobio, and Josh Russell-Fritch. 2017 Kauffman Index of Growth Entrepreneurship. Ewing Marion Kauffman Foundation, pp. 10 www.kauffman.org/kauffman-index/reporting/-/media/e37f4200462347dbb0d385e01e656be2.ashx. “Metropolitan Area Rankings.” The Kauffman Index, Ewing Marion Kauffman Foundation, Oct. 2017, www.kauffman.org/kauffman-index/rankings?report=growth&indicator=growth-rate&type=metro