Study: Madison ranked second for young entrepreneurs; can it hit No. 1?
Madison sits at or near the top of so many “best of” lists these days, it can be hard to keep up. Our town is livable, bikeable, environmentally friendly, happy, healthy, and smart, but is it really a great place for young entrepreneurs to get their businesses off the ground?
Well, it may not be the best in the U.S., but according to a recent study by financial education website NerdWallet.com, it ranks a more-than-respectable second.
NerdWallet weighed four factors in determining Madison’s ranking — networking and mentorship, economic vitality, affordability, and access to funds.
“I think Madison is indeed a city that’s still on the rise. … There’s no reason to think it won’t continue to attract young professionals and entrepreneurs.” — Sreekar Jasthi, author of NerdWallet.com’s “Best Cities for Young Entrepreneurs” study
In compiling its rankings, the website took into account Madison’s ultra-low unemployment rate (3.4%), its cost of living, and key business resources such as gener8tor, a local startup accelerator.
“Madison offers young entrepreneurs a healthy local economy in which businesses can thrive, thanks to high funding rates, low unemployment, a significant presence of educated professionals — especially due to UW-Madison — and a relatively low cost of living compared to other major cities,” said the study’s author, Sreekar Jasthi. “These factors combine to provide young entrepreneurs with a business-friendly environment, as well as financing opportunities and great networking and mentorship possibilities.”
If one looks at business formation in the state as a whole, the study’s conclusions might seem a little surprising. According to the Kauffman Index of Entrepreneurial Activity, which is widely considered the gold standard among measures of new business creation, Wisconsin has generally lagged behind the rest of the nation in rates of entrepreneurial activity, as have most of our Midwestern neighbors.
But in NerdWallet’s ranking, Madison was joined by Midwestern cities such as Lincoln, Neb. (No. 3), Minneapolis (No. 4), and Omaha, Neb. (No. 10).
With the polar vortex threatening to become a semi-permanent resident of the upper Midwest, the notion that young people are looking to set up shop in any of its cities might seem far-fetched, but according to Jasthi, the region has become more and more appealing to young entrepreneurs looking for an edge.
“As cities that have traditionally been popular destinations for young professionals — think West Coast and northeast cities — get increasingly saturated and affordability continues to decline, cities in the Midwest such as Madison will definitely become more and more attractive,” said Jasthi. “I think we’re already starting to see the perception change, as some of these cities have significant populations of young professionals. Like Minneapolis, Madison is definitely on the list along with other Midwest cities thanks to a strong local economy.”
Meanwhile, Madison ranked ahead of Denver (No. 5), Seattle (No. 6), Oklahoma City (No. 8), Plano, Texas (No. 9), and even Austin, Texas (No. 7), another university community that’s frequently lauded — and envied — for its vibrant entrepreneurial ecosystem.
The only city to top Madison in NerdWallet’s study? Arlington, Va., which currently ranks first in the nation in percentage of residents over 25 who hold bachelor’s degrees.
According to Greater Madison Chamber of Commerce President Zach Brandon, the study’s ranking is a good indication of the kind of positive momentum Madison’s entrepreneurial ecosystem has established of late.
“In just a few years, Greater Madison has seen the birth of new accelerators, co-working spaces, a nationally renowned hackerspace/makerspace, and networking groups that have played important roles in supporting the commercialization of ideas,” said Brandon. “Coupled with our world-class research university, a diversity of industries, a growing number of startups, a thriving urban landscape, and a high quality of life, Greater Madison continues to increase its density of young talent and, frankly, talent of all ages.”
That said, coming in second is not nearly as fun, or prestigious, as coming in first, and Brandon notes that there’s still room for improvement.
“What’s missing is a place that can bring all of these ingredients together — a destination where the collision of talent and ideas will transform lives and our economy,” said Brandon. “Growing that connectivity, increasing the collaboration of our entrepreneurs with each other, with government, education, and enterprise companies is what will propel us forward.”
Jenna Atkinson, an In Business columnist and the president of CONNECT Madison, a local young professionals group, echoed those sentiments, noting that there’s no reason Madison couldn’t one day be considered the top destination for young entrepreneurs in the country.
“First, we need to consolidate resources for startups and make them easy to find, evaluate, and engage with,” said Atkinson. “Right now we have many great organizations that help with everything from business plans and mentoring to funding, but they are somewhat scattered and difficult to navigate. If aspiring entrepreneurs had one central location to go for any startup-related questions, I think that would simplify the process and get more people connected to the resources we already have.”
Atkinson also notes that city and state leaders should be mindful of the messages they’re sending to outsiders when they craft policy.
“We need to have legislation that helps small businesses grow, not provide them with more restrictions,” said Atkinson. “For example, in a city that’s trying to promote entrepreneurship and innovation, it’s mind-blowing to me that we still have not accepted new business models like [ride-sharing services] Uber and Lyft. If we can’t accept a successful and innovative business model that’s already been adopted by most other large cities, what kind of message does that send to aspiring young entrepreneurs and startups?”
Meanwhile, the NerdWallet study’s lead author sees nothing but blue skies ahead for Madison’s young entrepreneurs.
“I think Madison is indeed a city that’s still on the rise,” said Jasthi. “Its climate has proven to be business-friendly, and as long as the local economy continues to be strong, especially relative to other major metro areas across the nation, there’s no reason to think it won’t continue to attract young professionals and entrepreneurs.”
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