Main Street Finance

Boston Ranked One of America’s Top Cities for Startups

By Andrew

Starting up a business is no easy task. It takes an immense amount of dedication, financial support, and a little bit of luck in order to be successful. Every decision made in the process can have resonating effects on the growth of the business. One of these all important decisions – finding the perfect spot to start the company.

Location can largely impact investor availability (and willingness), employment opportunities, and ultimately the overall valuation of the company. That’s why the geographic location chosen to be the headquarters is so important for entrepreneurs.

Unsurprisingly, not all cities in America provide equal opportunities for startups. A recent study by SimpleTexting.com analyzed the best and worst cities for startups – and it’s good news for Bostonians with big business plans.

With the fourth most startups in America, Boston is highly populated with future Fortune-500 hopefuls. The city has 121.2 startups per 100,000 people – compared to cities such as Riverside, California that have just two startups per 100,000 people.

This high saturation of startups indicates the support of the entire population. With the overwhelming presence of startups, Bostonians have endless options to shop small and support their neighbors. Shopping small is a great way to not only help struggling businesses to get off their feet but also find some unique and creative products.

Along with an increased number of startups is a decreased availability of investors. Boston fell on the bottom end of this ranking with only 1.2 investors per startup. There is a definite spike in competition and demand for investors in this city, eliminating all businesses that are anything short of the top of their class.

While this statistic is significantly less impressive than Kansas City, Hartford, or Riverside – each of which has over 50 investors per startup – it is still higher than big cities of Los Angeles, New York, and San Francisco which have less than one investor available per startup.

For employees and employers alike looking for a tighter-knit work environment, Boston strikes again. There are approximately 34.8 startup jobs available per 100,000 people – the third highest proportion in the nation.

Working for a startup is certainly not for everyone. It can be a risky move, but can also be very rewarding when the startup becomes achieves major success. It is far from a traditional office environment and allows employees to put their innovative skills to work.

At the end of the day, money is not the only thing that matters. But one of the most objective determinants of success is the company’s overall valuation. Boston startups are holding their own, tied for the fourth highest average valuation at $4.6 million. This is an impressive number given that it ranges from $2.6 to $5.1 million across America.

All factors considered Boston has consistently proven to be a strong location for startups to plant their roots. There is a strong sense of community in Boston that can ease business innovators minds knowing they are supported and far from alone. Today, Boston business hopefuls follow in the footsteps of many successful companies such as Liberty Mutual Insurance and Marshalls that also once started in Massachusetts.

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About Andrew

Andrew is a corporate finance consultant living in Los Angeles, specializing in distressed and bankrupt consulting. He helps clients review business plans and the general market and decide what steps to take next. He has a masters in finance. Andrew enjoys running and biking in the San Gabriel mountains, cheering for the San Francisco Giants and eating (but trying not to gain weight).