In a state-by-state analysis of start-up business activities, Connecticut moved from ranking 22nd among the smallest 25 states a year ago to 18th this year – the largest forward progress of any of the nation’s 25 smallest states.  Vermont also moved up four positions, from 13th to 9th.  And Kansas advanced three positions, from 18th to 15th.

This year among the 25 smaller states, Nevada was top in startup activity, followed by Oklahoma, Wyoming, Montana, and Idaho. Among smaller states, eleven ranked higher than they did last year, five experienced no changes in rankings, and another nine ranked lower.

The analysis was included in the 2017 Kauffman Index Startup Activity State Report, issued this month by the Ewing Marion Kauffman Foundation, based in Kansas City.

Among the twenty-five largest states, the five states with the highest startup activity in the 2017 Index were California, Texas, Florida, Arizona, and Colorado. Seventeen out of the twenty-five largest states had higher levels of startup activity in 2017 compared to last year.  Among the twenty-five largest states, the four that experienced the biggest increase in ranks in 2017 were Massachusetts, Tennessee, Washington, and Minnesota. The three that experienced the biggest negative shifts in rank in 2017 compared to 2016 were Louisiana, Maryland, and Virginia.

After two years of large increases, startup activity rose slightly in 2016, continuing an upward trend started in 2014, the report indicated. Only three years ago, the Startup Activity Index was at its lowest point in the last twenty years. Today it has gone up three years in a row, reaching close to the peak before the Great Recession drop, the report pointed out.

Among the twenty-five smallest states, the three that experienced the biggest increase in ranks in 2017 were Connecticut, Vermont, and Kansas. The three that experienced the biggest negative shifts in rank in 2017 compared to 2016 were Hawaii, Rhode Island, and Delaware.  In the twenty-five smallest states, the five states with the highest startup activity in the 2017 Index were Nevada, Oklahoma, Wyoming, Montana, and Idaho. Eleven smaller states had higher Startup Activity Index measures this year.

The Startup Activity Index is an index measure of a broad range of startup activity in the United States across national, state, and metropolitan-area levels. The Startup Activity Index captures startup activity along three dimensions:

  • The Rate of New Entrepreneurs in the economy— the percentage of adults becoming entrepreneurs in a given month.
  • The Opportunity Share of New Entrepreneurs—the percentage of new entrepreneurs driven primarily by “opportunity” as opposed to “necessity.”
  • Startup Density—the rate at which businesses with employees are created in the economy.
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