North Carolina was identified as a “state to watch” in Small Times magazine’s 2004 list of the Top 10 Small Tech Hot Spots.

The Ann Arbor, MI-based magazine, which covers business news and information about the small tech industry, listed North Carolina, along with Arizona, Colorado, Maryland, Minnesota, New Jersey, and Washington, as “contenders.”

Leading the Top 10 Small Tech Hot Spots was California, for its “mix of ideas, innovators, investors and its stomach for risk.” But its lead could narrow if its education system continues to produce a “poorly trained” workforce, the magazine said.

Massachusetts came in second because it “does more with less,” according to Small Times. Others grabbed more research funding, but Massachusetts is “better at turning even the crumbs into products,” it said.

Number three was New Mexico, where the success of innovators who sprang from the state’s two national labs offset a drop in research. It remains “rich in talent but relatively poor in venture capital,” the magazine stated.

Rounding out Small Times’ Top 10 Small Tech Hot Spots were, in order: New York, Texas, Illinois, Pennsylvania, Michigan, Connecticut, and Ohio.

Small Times magazine ranked the states based on a quantitative analysis that measured their strength in six categories, which were then weighted and added for an overall score between 100 and 1. The categories (and weightings) are research, industry, venture capital and innovation (20 percent each), and workforce and costs (10 percent each).

“States have embraced small technology as an important source of economic development,” said Steve Crosby, president and publisher of Small Times Media. “There is a tremendous amount of corporate and government money going into the development and commercialization of small tech in nearly every industry.”

Small Times: www.smalltimes.com