October 12, 2017


Dramatic Growth of Next-Wave Startups is Altering Geography of U.S. Entrepreneurship

WASHINGTON, D.C.—Boston and San Francisco's Bay Area held the two top spots, respectively, for the second consecutive year in a row in theInnovation That Matters report—released today by the U.S. Chamber of Commerce Foundation, Free Enterprise, C_TEC, and 1776. Philadelphia, San Diego, and Austin rounded out the top five rankings.

The Innovation That Matters report, now in its third edition, builds out a one-of-a-kind index comparing key statistics in 25 cities to show how well they are turning capital into successful tech industries, with a focus on next-wave startups, commonly viewed as technology-driven companies developing innovative solutions to complex challenges in different industries.

Across the industry, the share of next-wave startups—sectors spanning health, energy, education, and smart cities—grew 59 percent from last year. In these 25 cities, nearly half of all startup investment is flowing into next-wave companies; between 2012 and 2016, these investments topped $100 billion.

“These rankings represent far more than just bragging rights,” said Evan Burfield, co-founder and CEO of 1776. “Investments in next-wave industries have the potential to drastically change the landscape of entrepreneurship in the United States. Communities, companies, and local governments now face the challenge of nurturing and supporting these young businesses, developing them into permanent contributors to city economies.”

To compile the report, researchers examined the health of startup communities in these 25 U.S. cities and assessed their readiness to capitalize on an increasingly digital economy. City rankings and analysis are based on the results of an index that cross-references datasets focused on talent, capital, specialization, density, connectivity, and cultural statistics, as well as a survey of more than 413 startup leaders.

“This year’s research revealed a striking sense of disengagement between startups, industry leaders, and civic institutions,” said J.D. Harrison, senior director of strategic communications at the U.S. Chamber of Commerce. “In the digital economy, cities that build strong connections between local entrepreneurs and key stakeholders will be the ones that develop the most vibrant technology ecosystems—and they will be the ones best positioned to lead in the decades ahead.”

The cities ranked highest in the index were able to combine robust next-wave startup activity with new capital and innovative talent. The biggest jump in rankings came from cities with a high connectivity ranking. For example, Atlanta, Dallas, Baltimore, and New Orleans saw a significant jump in overall rankings due to effective collaboration between local leaders and companies with the next-wave startup community.

Innovation That Matters 2017 builds on research outlined in previousInnovation That Mattersreports, first released in 2015. Together, these reports can guide civic leaders in creating the kinds of connected communities necessary for next-wave startups to exist and thrive.

Key Recommendations for City Leaders

  • Embrace what makes your city unique and look for opportunities to establish industry-specific startup clusters that capitalize on your city’s distinct advantages.
  • Build connections between your city’s startups and local investors, government officials, and business leaders; encourage and sustain open communication and collaboration between them.
  • Promote entrepreneurship and innovation within your city, encouraging local students and other inventive thinkers to solve big problems by joining your city’s startup community.
  • Share your city’s startup story far and wide as a way to attract entrepreneurs, investors, and talent to your region, thereby fostering a robust local startup community.

Editor's Notes
Please click here to download the complete Innovation That Matters 2017 report and methodology, search shareable graphics, examine city-specific case studies and access detailed data tables.

For interviews with spokespeople, please email or call 202-463-5682.

Innovation That Matters is a research program designed to identify and explain how to create local innovation economies and leverage entrepreneurial thought to address the major challenges of our time. Innovation That Matters 2017 builds on the work of the two previous studies to provide cities and businesses with guidance on how to successfully shift to a digital economy.

1776 is a public benefit corporation that scouts and funds high-growth startups around the world focused on solving society’s most fundamental challenges in sectors like education, energy, transportation, and financial services. Launched by co-CEOs Donna Harris and Evan Burfield and headquartered in Washington, D.C., with additional campuses in Dubai and New York, 1776 serves hundreds of startups and institutions worldwide through its innovation curriculum, mentorship, investment, and programming. It hosts more than 500 international events per year that attract heads of state, Fortune 500 CEOs, influential investors, and global press.

The U.S. Chamber of Commerce Foundation is dedicated to strengthening America’s long-term competitiveness. We educate the public on the conditions necessary for business and communities to thrive, how business positively impacts communities, and emerging issues and creative solutions that will shape the future.

The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.