MN Ranks 46th on List Assessing Start-up Activity
Minnesota and the Twin Cities generally tend to fare well on national lists.
But the state appeared near the bottom of a just-released list of “the United States of Innovation,” which ranked all 50 states (and Washington, D.C.) based on activity within their start-up communities.
Minnesota was 46th on the list, compiled by national magazine Fast Company.
To assemble the list, the magazine assessed the U.S. Bureau of Labor Statistics’ launch rate of all private-sector businesses and The Kauffman Index of Entrepreneurial Activity’s percentage of people who are starting new businesses and how that percentage changed over time. Then, to learn about the health of young firms, the magazine tallied the percentage of jobs contributed by the businesses that were less than three years old and how that percentage changed over the past three years.
The magazine also looked at members of three organizations that aim to help start-ups gain access to the resources and funding they need to succeed.
The list didn’t include detailed information about each state, nor did it provide explanations of the rankings. But the Kauffman Index of Entrepreneurial Activity, a report that was compiled by the Kansas City, Missouri-based Ewing Marion Kauffman Foundation and released earlier this month, pointed out that perhaps fewer entrepreneurs are branching out to launch their own businesses because the economy is improving. In other words, many people start their own businesses out of necessity, when the economy is poor and jobs are scarce. And Minnesota’s economy has outpaced national averages with respect to unemployment. In March, Minnesota’s jobless rate was 5.4 percent, compared to the U.S. rate of 7.6 percent.
The Kauffman Index report found that there was a “substantial vacation” in U.S. entrepreneurial activity last year—but nowhere was it as pronounced as in Minnesota. That report defines entrepreneurial activity based on how many adults per 100,000 residents started a new business each month during the year. Minnesota fared the worst, with only about 150 out of 100,000 residents opening businesses on a monthly basis.
On Fast Company’s list, Florida ranked first, followed by Texas, Maryland, Arizona, and Alaska. Ranking at the bottom of the list were West Virginia, Oklahoma, Mississippi, Louisiana, and Kansas.
Among Minnesota's neighbors, South Dakota ranked 22nd, Wisconsin ranked 32nd, and Iowa ranked 45th.