Austin, Texas, has been recognized as the top city in the United States for startups in a new report by CommercialCafe. The ranking, published on December 10, 2023, highlights Austin’s favorable economic environment, which is attracting entrepreneurs and fostering business growth.
The report, titled “Best Cities for Startups,” analyzed large U.S. cities based on population categories, specifically cities with more than one million residents and those with populations between 500,000 and one million. Key metrics included costs associated with office and coworking spaces, success rates for Kickstarter funding, startup density, and survival rates of new businesses.
Austin excelled particularly in the category of cities with populations between 500,000 and one million. The study indicated that approximately 12 percent of all businesses in Austin are startups that have been operational for less than a year. Notably, these new ventures boast an impressive survival rate of 67.5 percent, indicating that more than two-thirds remain active five years after their inception.
According to CommercialCafe, “The Texas capital was the frontrunner for indicators that looked at the overall share of startups within the local economy, as well as growth rates from 2019 to 2023.” The city also ranked highest for its percentage of college-educated residents and the presence of consulting firms that support emerging businesses.
Two notable examples of successful startups in Austin include Homeward, a home finance company, and Jasper AI, an artificial intelligence-driven marketing platform co-founded by Chris Hull, a Forbes 30 Under 30 honoree.
The report also highlighted Austin’s exceptional success rate for Kickstarter campaigns, which stands at an impressive 52.6 percent. Since the platform’s launch in April 2009, over 6,000 campaigns have originated from Austin, with 3,187 achieving full funding. The concentration of engineers, developers, and tech entrepreneurs, coupled with the annual South by Southwest (SXSW) festival, creates an environment conducive to successful crowdfunding projects.
Additionally, freelancers play a crucial role in supporting new businesses that require specialized services. Austin’s freelance workforce has grown by 10.2 percent from 2019 to 2023, with approximately 46,655 freelancers active in 2023 compared to 42,322 in 2019. According to Fiverr’s annual Freelance Economic Impact Report, freelancers in Austin generated nearly $4 billion in 2023, significantly contributing to the city’s thriving tech ecosystem.
Despite its advantages, the report noted challenges related to office space rental in Austin. The average asking price for a 1,000-square-foot workspace, suitable for five employees, is approximately $45,456 annually. For startups seeking flexibility, the cost of coworking space for the same number of employees is about $14,100 per year.
Texas is emerging as a strong state for entrepreneurship, with several cities making the list of the best places to start a business. In addition to Austin, other Texas cities recognized include San Antonio (No. 2), Dallas (No. 3), Fort Worth (No. 4), and Houston (No. 7) in the category for cities with populations over one million.
For smaller cities, the top ten list for starting a new business includes:
1. Austin, Texas
2. Nashville, Tennessee
3. Indianapolis, Indiana
4. Tuscon, Arizona
5. Mesa, Arizona
6. Charlotte, North Carolina
7. Fresno, California
8. Albuquerque, New Mexico
9. Las Vegas, Nevada
10. Louisville, Kentucky
As the startup landscape continues to evolve, Austin’s recognition as the best city for new businesses underscores its role as a critical hub for innovation and economic growth in the United States.
