So why does the Raleigh-Durham metro area rank No. 4 among the nation’s top 25 startup hubs as documented in the “Innovation that Matters 2016” report published Wednesday?

Here’s an excerpt from the report.

  • Raleigh-Durham may not be one of the largest startup communities in the country, but its well-connected ecosystem, density of startup activity, strong cultural foundation and deep talent pool positions it well to thrive in the new digital economy. Indeed, due to the region’s ecosystem expanding beyond traditional boundaries of its metropolitan area, the region likely performs even better. The ingredients are all there for the region to continue to compete and win.
  • Despite serving as the crown jewel of the region, Raleigh-Durham’s universities are surprisingly not the focal point of its entrepreneurial ecosystem.Entrepreneurs cited connections with local corporations (2nd), institutions (1st), mentors (6th) and advisors (6th) as the strongest components of the ecosystem, but rated university engagement as relatively low (12th). This suggests that opportunities remain to further integrate the startup and university communities, particularly across cities within the region.
  • A strong openness to new ideas, a high quality of life and a favorable regulatory environment have created a world-class culture for attracting entrepreneurs to the area. Raleigh-Durham performed strongly across all three categories (3rd, 2nd and 7th, respectively), making it a national leader in fostering culture conducive to startup entrepreneurship.
  • Demographic trends should be a sign of concern for the region. A significant drop in the percentage of educated young people as a portion of the overall population (24th) and a lack of residential density (16th) in the Raleigh area, combined with limited transportation links between downtown hubs, suggest that the region still has a lot of work to do to create the vibrant urban environment that is often pivotal to the success of startup communities.
  • Health startups are keeping Raleigh-Durham at the forefront of digital entrepreneurship, but the inability to capitalize on potential in the Ed Tech and Energy Tech sectors suggests room for improvement. The region has strong established clusters in the education (10th) and energy (3rd) sectors, but this has not translated into much specialized startup activity (18th in both categories). Its established health cluster (5th) has led to a stronger concentration of health startups (7th).

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