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Premium Strategy
Jennifer Ortakales Dawkins and Mark Stenberg
Updated
2020-07-23T15:08:00Z
- Texas is the top state in the US for economic growth and business startups.
- Business Insider recently ranked it the best state in the US for entrepreneurs.
- The state is also ranked No. 5 overall in Fit Small Business' best states in America for female entrepreneurs.
- The top cities in Texas where entrepreneurs are starting companies and raising capital include Austin, Dallas, Houston, and San Antonio.
- Visit Business Insider's homepage for more stories.
The Lone Star State is giving big startup hubs like San Francisco and New York City a run for their money by matching business opportunity but offering a lower cost of living, a combination so enticing that Elon Musk recently chose Austin as the site of Tesla's second US factory.
Musk is not alone in his affinity for the state, as a number of high-profile Silicon Valley expats have set up shop in Texas — specifically Austin — in the past few years. Still, Musk's vote of confidence in the state's business climate is an outsize signal that Austin in particular has a bright future ahead of it as the newest darling of entrepreneurial investment. Musk's decision, which was sweetened by $65 million in tax rebates over 10 years, shows just how persuasive Texas' business-friendly policies can be.
In a country that worries about a recession daily, Texas is economically strong, with 2.7 million small businesses. Plus, there is no state income tax. Business Insider recently ranked Texas as the best state in the US for entrepreneurs — the state added small businesses at a rate of 9.5% per year from 2016 to 2018.
The state is also a top choice for women-owned businesses, ranked No. 5 overall in Fit Small Business' best states in America for female entrepreneurs. Women in Texas received $497 million in venture-capital investments last year, compared with $198 million in 2016, according to PitchBook.
Austin and Dallas prove that a city doesn't need a coastline to bring in tech talent. Business Insider's Katie Canales reported that Austin has been a hotbed for tech companies for decades. Last year, WalletHub ranked seven Texas cities among the top 20 best large cities in the US to start a business.
Tom Nolan is the president of the Austin jewelry company Kendra Scott. He moved to the area four years ago after living in New York City and Silicon Valley.
"The local venture community is extraordinary here. They want to back founders and smart people, and it's a welcoming, comfortable environment and a safe harbor in a lot of ways for people to start and get businesses off the ground," he told Business Insider.
He said the quality of life in Austin was another reason the city is desirable for so many companies, such as Outdoor Voices, Yeti, and Whole Foods, which all have headquarters there. His advice to entrepreneurs looking to start their business in Texas: Build a company around good people.
"Every company is only as strong or as weak as its people are, and you're getting a head start here because there's so many great people, hard-working, smart, diligent, entrepreneurial-minded folks here that want to make an impact in business and their communities," he said.
Here are the top cities in Texas where entrepreneurs are starting companies and raising capital.
Austin and Round Rock
Number of companies founded in 2019: 149
Venture capital invested in women-owned businesses in 2019: $269 million
Austin, along with its surrounding cities, is one of the most rapidly growing metro areas in the US, Curbed reported, and a prime spot for tech jobs. Elon Musk recently chose the city as the location of Tesla's second US factory, which will build the automaker's Cybertruck, another indication that the Silicon Hills are alive with the sound of tech investment.
It's also one of the healthiest cities to live in, according to a report by Mindbody.
Source: PitchBook
Dallas, Fort Worth, and Arlington
Number of companies founded in 2019: 179
Venture capital invested in women-owned businesses in 2019: $37 million
Dallas, along with its surrounding area, is getting a major attraction in a couple years: an urban park 11 times the size of New York City's Central Park.
Source: PitchBook
Houston, Sugar Land, and Baytown
Number of companies founded in 2019: 214
Venture capital invested in women-owned businesses in 2019: $183 million
Houston is the most populous city in Texas, with a population of 2.3 million. Though it's known for massive oil refineries and energy companies, healthcare and technology are burgeoning industries.
Source: PitchBook
San Antonio
Number of companies founded in 2019: 78
Venture capital invested in women-owned businesses in 2019: $8.7 million
San Antonio is the third most rapidly growing city in Texas. It had a net migration of 239,501 between 2010 and 2018, according to a report by Business Insider.
Source: PitchBook
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