The Best American Cities to Launch a Startup

Have you ever wondered what the biggest difference between ordinary people and IT geeks is? Well, the first group believes that Silicon Valley is the center of the startup world, while the second can easily explain the difference between Silicon Beach, Silicon Mountain, and Silicon Alley. And if you feel like googling all three names, don’t even bother: we are here to save you time. In this case, the ‘big three’ stands for Los Angeles, Denver, and New York accordingly.

And yes, it is confusing. With all these new tech centers emerging and competing with one another, it gets close to impossible to tell which American city is going to be the next big thing for launching a startup. But here at Rentberry, impossible equals interesting. So, we accepted the challenge and created a list of the best American cities for startups in 2023.

San Francisco, CA

Despite the surging rent prices for office spaces and one of the highest residential rents in the United States, San Francisco remains the primary launching pad for startups from across the world. San Francisco is the tech stronghold of the world, serving as headquarters for tech juggernauts such as Facebook, Apple, Paypal, Cisco, and Google. Here, you can surround yourself with many like-minded tech entrepreneurs, exchange ideas, and thrive in an inspirational environment.

Silicon Valley is a golden standard for the tech hubs of the world with a mature business ecosystem, a network of angel investors, diverse accelerators, and venture funding opportunities. In the third quarter of 2021, Silicon Valley startups raised over $30 billion in the supergiant funding rounds of $100 million and more. This is undeniably the highest figure in the country by a large margin.

The local policymakers work hand-in-hand with the tech community to create a welcoming environment for tech founders. According to local laws, since 2021, businesses with less than $2 million in gross receipts are exempt from paying the local taxes on them by the city council initiative. Additionally, there are not only federal but also state payroll tax exemptions for biotech and medtech companies. What’s more, the city funds the web-and-code training and placement program to increase the competence of the urban workforce.

Most famous startups: Dropbox, Medium, Airbnb
Venture capital investment per capita: $1,415

Boston, MA

Given Boston’s proximity to the leading universities (MIT, Harvard, and more) and its long history of computer science development, it is no wonder why the city is so good at mirroring the advantages of Silicon Valley. Recent studies show that entrepreneurs in Boston have a higher quality of life. In fact, Walk Score ranked Boston the 3rd most walkable large city in the country. Plus, the average rental price here is significantly lower than in Silicon Valley. According to our statistics, locals pay approximately $3,463 per month for a 1-bedroom apartment in the city center. What’s more, Boston is known for its strong connections with institutions and universities. It is an exceptionally educated city (as much as 45.2% of local adults have a bachelor’s degree or higher), which creates perfect conditions for new enterprises to appear, grow, and prosper.

Most famous startups: Facebook, Hubspot, Runkeeper
Venture capital investment per capita: $665

San Diego, CA

San Diego is an up-and-coming startup ecosystem. For years, San Diego has been a beach town and a biotech town. The vast share of venture capital funding went toward the city’s healthcare innovations, biotechnology, and applied life science research. Those industries are primary drivers of the growth of the local economy. Nevertheless, over the past years, the local tech scene started to pick up steam due to the proactive coders’ community. In 2012, the group of local enthusiasts started an annual gathering, Startup San Diego, to promote investments in local tech. The first event gathered a little over two hundred people. Last year, the attendance grew to over 4,500 participants. The city government reinforced these initiatives with programs to boost the technology brand of the city and steal tech talents from the Bay Area, outlining the city’s affordable housing, lower cost of living, and year-round surfing weather. As a result, the city slowly got a footing in the tech industry, with its first unicorns, Seismic and TuSimple.

Most famous startups: Classy, TakeLessons, SweetLabs
Venture capital investment per capita: $434

Austin, TX

There are plenty of reasons why you should turn your attention to Austin, but the absence of state taxes and the local talent pool (thanks to the University of Texas) are major among them. No wonder this city has already become home to more than 4,700 hi-tech companies and almost 50 startup accelerators and incubators. Whether it is strong local support of the Austin Chamber of Commerce or a large piece of luck, chances are good that Austin will keep on accumulating its significance on the American tech scene. Even though Austin might not be the cheapest city to live in ($1,863 per month for a 1-bedroom apartment), you should definitely consider launching your startup here!

Most famous startups: BigCommerce, HomeAway, Indeed
Venture capital investment per capita: $323

Washington, D.C.

Like it or not, the odds are good that Washington, D.C., is soon to become the next big tech hub. Despite the relatively high price for rent ($2,632 per month for a 1-bedroom apartment) and a relatively low transit score (only 77 out of 100), entrepreneurs are flocking to the city. It is hard to argue that the local tech sector is dependent on the government, and it’s not cheap to found a startup there, but some factors seem to outweigh the drawbacks. First and foremost, the city is famous for its rich collaborative culture and a high level of diversity. In fact, the Washington area is considered one of the most diverse in the entire country. Here in DC, people want each other to succeed, which is why you can always rely on the helping hand of others. Local think tanks and universities make DC incredibly educated. This city is brimming with brilliant developers, designers, and team leads.

Most famous startups: Analytica, LivingSocial, Technica.ly
Venture capital investment per capita: $138

Los Angeles, CA

The up-and-coming startups from Los Angeles give us grounds to call the city Silicon Beach. Don’t be fooled by the laid-back lifestyle, beaches, and entertainment the City of Angels is so famous for. In fact, Los Angeles seems to be one of the major wavemakers in the ‘tech ocean.’ It is hard to tell what exactly makes this city booming with promising startups, but chances are good that the famous faces and the megaphone-like nature of the city are both playing a key role. If you are thinking of moving to LA, you’d be glad to know that the city that was once built for cars is now becoming more and more suitable for walks and bike rides. Plus, the median rent here is lower than in San Francisco or San Jose: locals pay around $2,080 per month for a 1-bedroom apartment.

Most famous startups: Snapchat, FullScreen, Clutter
Venture capital investment per capita: $110

New York, NY

Hopefully, you are not too surprised to see the Big Apple on the list. Although New York attracts significantly less in venture capital, there is one thing that makes the city stand out in the global startup scene. This one thing is usually referred to as hyphen tech. More and more startups gain their popularity by aligning themselves with a number of industries. This is how media tech, fintech, fashion tech, and anything-else-tech startups emerge and succeed. It is worth saying that New York City is ranked the most walkable city in the United States, and its rental prices are not as high as in San Francisco. On average, New Yorkers pay $3,980 per month for a 1-bedroom apartment, as in 2023 the prices for rentals went back up in NYC after the pandemic.

Most famous startups: Foursquare, Kickstarter, BuzzFeed
Venture capital investment per capita: $105

Denver, CO

The times when Denver was most famous for its picturesque mountains seem to have sunk into oblivion. Slowly but surely, the city turns into another center of innovation and tech. As Denver continues to boom with startup ideas, more and more millennials seem to flock there. According to industry experts, there were two major factors that unlocked the city’s potential. First was TechStars, a startup accelerator founded by four passionate entrepreneurs. The second and crucial factor was the government approval. The city was lucky to have both the Colorado Governor and Denver Mayor agree upon the fact that support of startups should be a top priority. All in all, Denver is a great place to live. The average rental price for a 2-bedroom apartment is $2,337 per month, and the local cost of living index is 74.27, meaning it is relatively cheap to live there.

Most famous startups: Craftsy, Tech Mobile, Zen Planner
Venture capital investment per capita: $90

And what is next?

We wouldn’t go as far as to say that Silicon Valley has lost its lust, but it is time to face the truth: it no longer holds a monopoly on innovation. No matter how long we’ve been taking it for granted that this place is the center of the startup universe, it’s time to challenge the status quo.

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