

Which States Have the Best Startup Environments? - sachinag
http://www.sachinagarwal.com/what-states-have-the-best-startup-environment

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chimariko
This is interesting analysis. However I think the most important factors of
success of a start-up are 1) what service to provide; 2) team to run the
business. Friendly funding environment is a plus, but it is not a sine qua non
for a young company.

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sachinag
I don't think anyone disagrees with that.

The point of the analysis is to answer the question "if you're a team that has
identified a promising market and looking to build a product, where should you
be?"

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anamax
That's a meaningless question because it ignores important factors that often
swamp the generic data.

For example, the product and market matters. If you're starting a fossil-fuels
related company, you're probably better off in Wyoming than on Sand Hill Road.

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kevinpet
I suspect a lot of this is due to California's employee-friendly laws that
prevent non-compete agreements and prevent "we own every thought you have"
intellectual property assignments.

As a libertarian I naturally lean towards freedom of contract, but some things
are properly inalienable.

Are these common in other states?

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spamizbad
Sort-of, although states with similar laws tend to be more ambiguous, which
results in messy legal battles where the employees are often outgunned by
corporate lawyers. California's is fairly clear and has been tested in court
on several occasions.

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miked
Here's some data on the best and worst tax climates, by state:

[http://taxprof.typepad.com/taxprof_blog/2009/09/2010-state.h...](http://taxprof.typepad.com/taxprof_blog/2009/09/2010-state.html)

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meterplech
It is interesting to compare the tax climates to the $s of funding.
California, Minnesota and Iowa manage to have successful startup per capita
despite these harsh laws.

And, Wyoming is dead last in dollars for funding, but second in tax
environments. Clearly Wyoming has a sparsely populated state, but per capita
was supposed to account for that.

As a native Marylander, I am a bit intrigued by how the recent tax changes
targeted at businesses will effect this sort of data. It is already seemingly
hurting Maryland in comparison with other states (1 year avg < 3 yrs < 5 yrs),
but other factors may come to play.

Perhaps a great indicator is population density, or more specifically educated
peoples density.

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mojonixon
Wyoming has oil, which probably pushes out investment in other industries (why
invest in a startup when you can invest in an oil well?). It may have a
localized version of the Dutch disease.
<http://en.wikipedia.org/wiki/Dutch_disease>

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martey
Does anyone know of a state-by-state comparison of the laws and regulations
around forming a business in each state (registration fees, etc.)? This seems
like it would be a useful metric, if one was choosing to relocate based on
business environment.

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hooande
Most funded companies are incorporated in Delaware. Many VCs insist on it.
Delaware has positioned itself as "business friendly" with low corporate
registration fees and a legal system that favors business interests. YC
recommends that all of their founders incorporate in Delware.

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sachinag
I've told the story before: when I was a VC, a deal almost fell apart because
the California Secretary of State rejected the new articles of incorporation
after the funding. They didn't like the voting structure for some bizarre
reason.

Incorporate in Delaware - it's the safest, because they 1) give more leeway to
management and 2) the Chancery court there has a ton of caselaw so there are
very, very few surprises.

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te_platt
A lot of comments have pointed out that there are problems with the metric
used in the article. Still, the differences aren't measured aren't off by 20
or 30 percent. Some states have 10 times the amount of venture money as
others. Clearly there are factors that make some places better (in some
absolute sense) than others for doing a startup. I think it would be
interesting to see the same data on a city level.

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fjabre
Interesting...

I'm surprised by Massachusetts being even slightly higher than California per
capita but possibly has to do with population size I guess.

At any rate, good to know that 'number 2' may not be so far behind 'number 1'
as some would have you believe...

Thanks for this great post!

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Goladus
Yeah I think that's an artifact of the "per-capita by State" metric being
used, which really isn't all that useful. If you were to combine all of New
England with New York and then compare, California would come out ahead. (Or
just compare Northern CA with MA)

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sachinag
Don't forget that this data _excludes_ angels. My feeling is that CA companies
tend to get way more seed/startup money from angels than do MA companies,
where firms like Flybridge, Atlas, etc. do early stage investing.

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quellhorst
This isn't useful... The first graph has Iowa above Texas. The founders of the
company make a much bigger difference than the state of founding.

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spamizbad
It's per-capita funding, so why would state size matter? There's actually been
considerable startup activity in Des Moines and Iowa City, so I'm not
surprised to see Iowa passing Texas on a per-capita basis.

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quellhorst
The title is "Which States Have the Best Startup Environments." The metrics
used in the article are not the best.

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mdg
In the 3-Year Average graph, South Dakota is below $0.00, is that possible?

