Los Alamos
Physical features, like mountains, add to communities’ entrepreneurial appeal.
Physical features, like mountains, add to communities’ entrepreneurial appeal.

The heartland is home to some well-rounded startup and entrepreneurship spaces — take Austin, Texas, or Chicago. But the region’s ecosystems are still lagging behind the coasts, a new report from Bentonville, Arkansas-based think tank Heartland Forward reiterates.

On its Entrepreneurial Capacity Index, which looks at the percent of private sector employees with bachelor’s degrees or above at young firms five years of age or less, California ranks number one and New York number two. Utah, New Jersey and Colorado take the next three spots. The first heartland state is Texas at number 14, and number 50 is West Virginia.

Factors such as education, access to early-stage risk capital and quality of life explain 86% of the overall difference in the composite measure of entrepreneurship between states, according to the report. The number of people with bachelor degrees, access to computers and access to capital matters a lot — for instance, Nebraska, which is ranked number 37, could jump up 10 spots if it raised its bachelor degrees by 16%, according to the report. 

“Heartland states do not provide the opportunities and support needed for entrepreneurs to thrive and be successful,” according to the report. “Entrepreneurs today could be labeled as the first remote workers who can choose where they want to build their business and live. It is no wonder they choose mountains and coastline if the middle of the country does not value entrepreneurship in the same way.”

The Value of Mountains and Coastlines

Here are five steps heartland states can take to boost their entrepreneurship, according to the report:

  1. Fund organizations that are supporting entrepreneurs, such as chambers of commerce, mentorship groups and accelerators
  2. Support state-level risk capital, which can look like committing 5% of government procurement dollars to businesses under 5 years old, updating the Small Business Credit Incentive to encourage more business financing or educating people who are eligible on how to become angel investors. 
  3. Improve access to high speed internet, especially against the working-from-home backdrop the pandemic created.
  4. Invest in higher education, which produces higher performing workforces but also leads to more innovation in college labs. This focus would also attract more immigrants, who tend to come to the U.S. to study and have one of the highest rates of entrepreneurship. 
  5. Teach entrepreneurship to kids in K-12, so they think of entrepreneurship as a potential career path

“As the historic amount of funding is flowing to states and communities to increase access, affordability and adoptability, policymakers and state broadband offices need to ensure they are putting funds across their entire community—including a focus on entrepreneurial growth,” according to the report. 

Heartland Forward has a calculator on its website that will show the potential impact of these steps for each state. 

Meanwhile, there’s one thing the heartland will never be able to offer:  the coastline. But it has some mountains. Heartland Forward found that states with these physical features — more miles of coast and more feet of mountains — are more likely to have entrepreneurial success.

This story and others on New Builders Dispatch are made possible by a sponsorship from the Ewing Marion Kauffman Foundation. The Ewing Marion Kauffman Foundation is a private, nonpartisan foundation that provides access to opportunities that help people achieve financial stability, upward mobility, and economic prosperity – regardless of race, gender, or geography. The Kansas City, Mo.-based foundation uses its grantmaking, research, programs, and initiatives to support the start and growth of new businesses, a more prepared workforce, and stronger communities. For more information, visit www.kauffman.org and connect with www.twitter.com/kauffmanfdn and www.facebook.com/kauffmanfdn.