Austin, Texas has been named the best city in the United States for launching a new business, according to a recent report by CommercialCafe. The study highlights the city’s favorable economic conditions and vibrant startup ecosystem, making it an attractive destination for entrepreneurs. The report, published on December 10, 2023, evaluated large U.S. cities based on various metrics, including office costs, startup density, and survival rates.
The findings reveal that Austin stands out among cities with populations between 500,000 and 1 million residents. The report states, “Specifically, 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 in five years (2019 to 2023).” Austin also excelled in the percentage of college-educated residents, which is crucial for supporting new enterprises.
Approximately 12 percent of businesses in Austin are startups that have been operating for less than a year. The report indicates a survival rate of 67.5 percent, meaning more than two-thirds of these startups are expected to remain active up to five years after their establishment.
Two notable examples of successful Austin startups include the home finance company Homeward and Jasper AI, a marketing platform co-founded by Chris Hull, a Forbes 30 Under 30 honoree. The report also highlights Austin’s impressive 52.6 percent success rate for Kickstarter campaigns, a platform for crowdfunding creative projects. Since its inception in April 2009, over 6,000 campaigns have been launched in Austin, with 3,187 successfully funded.
The city’s robust environment for tech entrepreneurs and engineers, alongside major events like the annual South by Southwest (SXSW) festival, contributes to the success of these crowdfunding initiatives. The festival serves as a launchpad for various innovative projects, helping to cultivate a thriving creative community.
Freelancers also play a crucial role in supporting new businesses. The freelance workforce in Austin has grown by 10.2 percent from 2019 to 2023, reaching 46,655 freelancers this year, compared to 42,322 in 2019. According to Fiverr’s annual Freelance Economic Impact Report, local freelancers generated nearly $4 billion in 2023, underscoring the significant contributions of the independent workforce to Austin’s economy.
Despite its many advantages, startups in Austin face challenges, particularly in securing affordable office space. The average asking price for a 1,000-square-foot workspace for five employees is approximately $45,456 annually. For greater flexibility, the cost of a coworking space for the same number of employees is about $14,100 per year.
CommercialCafe’s report further emphasizes that Texas is a leading state for new business ventures. Alongside Austin, other Texas cities ranked highly in the report, including San Antonio at No. 2, Dallas at No. 3, Fort Worth at No. 4, and Houston at No. 7, all making the top ten list for cities with over one million residents.
The top ten cities for startups in the smaller population category are as follows:
1. Austin, Texas
2. Nashville, Tennessee
3. Indianapolis, Indiana
4. Tucson, Arizona
5. Mesa, Arizona
6. Charlotte, North Carolina
7. Fresno, California
8. Albuquerque, New Mexico
9. Las Vegas, Nevada
10. Louisville, Kentucky
Austin’s recognition as the prime city for startups reflects its dynamic entrepreneurial landscape, fueled by a combination of a skilled workforce, supportive infrastructure, and a culture that fosters innovation. As the city continues to attract new businesses, it remains a beacon for entrepreneurs seeking to turn their ideas into reality.
