RALEIGH – Thinking you may take a leap of entrepreneurship and launch a business in North Carolina? You may find that the entrepreneurial ecosystem in the Tar Heel State is quite friendly and set up for your potential success.
That’s because the state ranks among the best in the nation when it comes to the infrastructure, business climate, and access to capital, according to a new study from Lensa, which is a United States-focused job board.
While North Carolina didn’t crack the top spot, it did finish in fifth place, behind Texas, Georgia, California, and Illinois.
Ohio, Minnesota, Massachusetts, Colorado, and New Jersey rounded out the top 10 ranked states.
NC IDEA announces 20 grant recipients at annual event, putting $2.3M into NC economy
What’s happening
There are signs that North Carolina’s entrepreneurial economy continues to grow, even in a macroeconomic environment where venture capital deal flow appears to be slowing.
Take this week’s NC IDEA 2022 Ecosystem Summit, where the organization announced that it had made $2.3 million in grants in this quarter alone to fuel startup ecosystems statewide as well as specific companies through non-dilutive grants.
And, consider that the rate of new business formations continues to increase, even as the economy shifts and many are concerned about layoffs.
Venture Capital deals slowing but it’s not time to ‘wring our hands,’ VCs say
Behind the rankings
The analysis tracked eight key metrics tied to startup success, including new business applications, business survival rate, rate of new entrepreneurs, corporate tax rate, the percentage of the state’s population that had earned a bachelor’s degree or higher, labor costs as measured by average income per capita in 2020 dollars, the cost of living, and a measure of venture capital access that compared to total venture money disbursed per $1 million in state gross domestic product.
North Carolina had 171,355 business formations, according to the analysis, which pulled data on that metric from the United States Census Bureau. But the North Carolina Secretary of State’s Office tracked a bit more than that in 2021, WRAL TechWire reported in January.
And Secretary of State Elaine Marshall told WRAL TechWire in August that the pace of new business formations in 2022 remained “torrid” with 93,000 new businesses formed statewide through the midpoint of the year.
New businesses launching at ‘torrid’ pace so far in 2022, NC Secretary of State says
The Lensa analysis also found that North Carolina’s business survival rate outpaced each of the other top five state finishers except for California, with a survival rate of 7.03%.
North Carolina also punches above its weight on the venture capital disbursed per every $1 million of state gross domestic product, at $6,082, according to the study, ranking third among the top 10 ranked states in the study.
That’s more than twice that of first-place Texas, at $3,000, and more than both second-place Georgia ($3,824) and fourth-place Illinois ($4,175). Still, on this measure, third-place California and eighth-place Massachusetts lap the field, with $29,416 and $31,792, respectively, and ninth-place Colorado also outpaces North Carolina at $8,193.
North Carolina also led the top ten ranked finishers in the study on labor costs, with $31,993, slightly outpacing Texas, Georgia, and Ohio. But this measure was analyzed using 2016-2020 data from the United States Census Bureau as the average income per capita from the prior 12 months, expressed in 2020 dollars.
