Greater Washington may generate less startup and innovation buzz than some regions (we’re looking at you Bay Area, Austin and Seattle), but we are the best metro area for entrepreneurship. For the second year in a row.
That’s according to a new study by The Kauffman Index of Growth Entrepreneurship, which ranks 40 metro areas on factors such as startup formation, high-growth companies and the number of startups that reach scale in 10 years.
That puts Greater Washington above No. 2 Austin, No. 3 San Jose and ahead other metro areas like Boston, San Diego and San Francisco. Washington’s rank was unchanged from last year, when it was also at the top.
All but four of the 40 metro areas saw growth in their entrepreneurship score. Sacramento, Riverside, California, Miami and Detroit saw declines. And the five cities that saw the biggest drop in the rankings (despite having a positive score) were Chicago, Baltimore, Pittsburgh, Milwaukee and Indianapolis, as other cities overtook them in the rankings.
West Coast cities dominated in some of the categories used to compile the overall entrepreneurship scare. For IPO density, measured by the rate of public offerings per 100,000 businesses, San Jose and San Francisco topped the rankings, with Boston and San Diego rounding out the top four. Greater Washington came in at No. 7.
The rankings correlate strongly to a recent report on innovation by the 2030 Group and written by venture capitalist Jonathan Aberman that showed Greater Washington has built 105 $1 billion startups over the last 20 years but outlined areas where the region needed to improve to stay competitive.
Venture funding also continues to remain strong even as national funding weakens. The region — which includes Baltimore — saw $346 million in venture funding in the first quarter of 2016, the strongest first quarter since 2001. But nationwide venture capital funding fell from $13.7 billion in the first quarter of 2015 to $12.1 billion in the first quarter of 2016 — a nearly 12 percent drop.
Other findings from the report include:
- Washington did not crack the top five metro areas for high-growth advertising and marketing companies. The top spot went to Columbus, Ohio.
- Greater Washington ranked No. 5 in business products and services, coming in just below Austin and Boston. Nashville led the rankings.
- Measured by state, Virginia and Maryland topped the list in highest entrepreneurship activity.