You can be on Entrepreneur’s cover!

Move Over Silicon Valley. These Startup Cities Are on the Rise. The growth is not just happening in the California tech hub.

By Rose Leadem

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

Jeremy Woodhouse | Getty Images

After years of stagnation, startup activity is on the rise again.

For the second year in a row, the rate of new businesses rose in 2016 across the country, nearly reaching a level not seen since before the recession, according to a new report from the Ewing Marion Kauffman Foundation. Only two years ago, startup activity was at its lowest point in the past 20 years.

The Kauffman Index of Startup Activity ranks how quickly businesses across all industries in the U.S. are growing -- from both national, state and local perspectives. Based on a national sample representing more than 5 million U.S. companies, the index takes a look at both entrepreneurs and startups.

To understand and analyze the startup activity across the nation, the report equally weighs three indicators: the rate of new entrepreneurs, the opportunity share of new entrepreneurs and startup density. It analyzes state data by dividing them into halves -- the 25 most populated states and the 25 least populated.

Of the larger states, 11 ranked higher than the year before, two experienced no changes and the remaining saw a negative shift. It's no surprise that Texas, Florida, California, New York and Colorado had the highest startup activity -- finding Austin, Miami, Los Angeles and San Francisco to be the areas with the most activity.

Among the smaller states, eight ranked higher than the year before, seven saw no changes and the rest fell short. Between these states, Montana, Nevada, Wyoming, Oklahoma and Alaska were among those bustling with startups.

With the growing rate of entrepreneurs, creating your own hours and pursuing your passion is an increasing trend this year. The report found that in Pennsylvania, there were 180 new entrepreneurs for every 100,000 people in a given month. In California and Texas, there were about 390 new entrepreneurs per 100,000 people. The report uncovered a positive relationship between the rate of entrepreneurs and the density of an area: Austin had 600 new entrepreneurs per every 100,000 people.

The report also showed that entrepreneurship is often born of unemployment. The opportunity share of new entrepreneurs (the number of new entrepreneurs driven primarily by "opportunity" vs. "necessity") varied state to state, but was similar regardless of whether the state was classified as small or large. Seven in 20 entrepreneurs in Alabama were previously unemployed, as were one in every 10 entrepreneurs in Ohio.

It's no shock that San Jose -- often considered the heart of Silicon Valley -- had the most new entrepreneurs, with a 94.2 percent opportunity share of new entrepreneurs. San Francisco was also among the cities seeing a big jump in the action. But Orlando, Kansas City, Cincinnati, Nashville and Detroit also saw the biggest increases compared to last year.

Rose Leadem is a freelance writer for Entrepreneur.com. 

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Business News

James Clear Explains Why the 'Two Minute Rule' Is the Key to Long-Term Habit Building

The hardest step is usually the first one, he says. So make it short.

Business Solutions

Set Your Team up for Success and Let Them Browse the Internet Faster

With ad blocking, Control D is $35 through April 21.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Business Solutions

Grab Microsoft Project Professional 2021 for $20 During This Flash Sale

This small investment is well worth the time it will save your team in organizing and monitoring project work.

Business News

Microsoft's New AI Can Make Photographs Sing and Talk — and It Already Has the Mona Lisa Lip-Syncing

The VASA-1 AI model was not trained on the Mona Lisa but could animate it anyway.