Comparing Top US States for Startups

Against all odds, it would seem that the year the world has been subjugated to as a result of COVID has not dampened the US’s creative spirit. Across the country, when almost everybody was limited to conducting regular business from a home office, people have found new ways of living off their ingenuity by offering all kinds of services and the number of startups across the country has skyrocketed. In a study by Rovva it was found that the two most entrepreneurial states across the US were: Florida and California.


Between 2019-2020 462,332 businesses were formed in Florida. Whilst its typical reputation of a top destination stems from its location: beaches, theme parks and picturesque golf courses, in recent years it’s become an attraction for entrepreneurs seeking an escape from competitive startup environments, expensive house prices and high income taxes.

The main benefit of Florida appears to be that money goes further. Its low-income tax and house prices are a massive draw for startups, and seem infinitesimal in comparison to other startup hubs. For example, in Miami, the most expensive city in Florida, the median home value is over $350,000, but this is still about $1M less than the median home value in San Francisco.

Successful startups based in Florida, such as the newly minted Miami-based unicorn (privately owned startup valued at over $1B) REEF Technology, also attract major resources to the area, making the environment even more conducive for new businesses. Startups from the area brought in $2.8B in venture capital last year, an increase of $1B from the year prior.

In addition to this, the notable exit (i.e. sale) of startups from the area encourages investors and builds the area’s notoriety as an ecosystem for startups; the hope is that founders will flood resources back into the local environment by either investing in other startups or innovating new business ideas themselves. For example, Florida-based unicorn Chewy was bought by PetSmart in 2017 for $3.3B.

Growing interest from high-profile entrepreneurs further boosts Florida’s visibility. In 2019, the co-founder of AOL and the CEO of The Washington went on a road trip through the state as part of the Rise of the Rest; this is a competition dedicated to funding startups in emerging US markets.


Over 360,000 businesses were formed in California between 2019-2020. Many giants of technology have established their headquarters here in the infamous Silicon Valley, and continue to operate from the region with humongous success. Apple, Google, HP, Intel, Adobe and eBay are all based here.

This location continues to attract new startups despite the high cost and level of competition in the area. This is because many of the reasons for this region’s success are related to the social and cultural characteristics of the technology community that has developed there. It is the primary centre for technological innovation because success breeds success – the environment is characterised by collaboration and risk taking.

Many successful startups based in the area are created by the employees of the technological behemoths because it’s extremely easy to connect with experienced people in the field and seek their guidance. Where it might help a startup to initially get on its feet by basing in a place with low housing costs and income tax, they are sacrificing the abundant knowledge, expertise and innovation present in Silicon Valley, California.

Closing Remarks

COVID has led to an explosion in startups across the US, with several key states being responsible for the majority of this increase. Florida had the greatest numerical increase in startups with over 460,000 business being created between 2019-2020. California was a close second with over 360,000. 


However, comparing the two based purely on numbers is futile in answering the question of which is better for startups as they both have their own unique reasons that hold weight outside of the numbers. The primary advantage of Florida for startups is the value of money there: the cost of living is tiny compared to its competitor and its low income tax is a huge draw. On the other hand, Silicon Valley in California is an established hub for innovation; its ‘success breeds success’ ethos attracts many startups who can seek out the guidance from the industry leaders.