Four cities in the Valley have been ranked among the best “untapped” places in the nation for a startup business.

The ranking, by New York-based lending company Fundera, looked beyond the typical startup havens such as Silicon Valley, Boston and Seattle, as well as the fast-growing second tier startup cities such as Austin, Texas, or Portland — where the cost of living is escalating quickly — to see which smaller cities have a high potential for startup success.

The 45 cities were ranked based on a variety of factors including the population with a bachelor’s degree, average rent of office space, year over year rent growth, median household income, living wage cost and number of venture capital deals between 2013 and 2019. Only cities with populations under 500,000 were considered.

Both Chandler and Scottsdale cracked the top 10 in the ranking, partly due to their proximity to Tempe (a strong pool of job candidates from Arizona State University) and Phoenix.

The top 10 best small cities for startups were:

  • Madison, Wisconsin (1)
  • Plano, Texas (2)
  • St. Paul, Minnesota (3)
  • Cincinnati, Ohio (4)
  • Durham, North Carolina (5)
  • St. Louis, Missouri (6)
  • Arlington, Texas (7)
  • Chandler (8)
  • Henderson, Nevada (9)
  • Kansas City, Missouri (10, Tie)
  • Scottsdale (10, Tie).

The study mentioned the fact that the Phoenix area saw 122 venture capital deals inked in the past three years is another reason for Chandler and Scottsdale being ranked on the list, as is the proximity to Sky Harbor International Airport. The other two Valley cities in the rankings were Gilbert, at No. 23, while Glendale was No. 28.

Among the factors considered in the ranking, Gilbert scored the best on average office property rent, at $17.62 per square foot, while Scottsdale had the highest, at $22.36.

The full study can be found here.


By Phoenix Business Journal